Challenge and Opportunity for Michigan Nonprofits Part 3 of 5

Picking up from yesterday, we see the three factors converging.

4. The convergence of 1, 2 and 3 above means is that a significant number of nonprofits will be forced to beef up fundraising operations over the next decade. They will need to go to the donors more often; they’ll have to ask them for more money, and they will be forced to significantly widen and deepen their donor prospect pools.

For example, in one recent client’s 10-year projections, whereas they now raise $250,000 a year on a $46 million annual budget, by 2018 they anticipate having to raise $17 million annually on a $68 million budget. To move from raising a quarter million to $17 million is quite a step! To accomplish that kind of objective, nonprofits will be investing in professional fundraisers (salaries and benefits), donor database software, and other fundraising infrastructure. They will be sharpening their cases for support. Because they will need to raise many times the amount they currently do from the public just to keep mission accomplishment at current levels.

5. But the Michigan public isn’t ready for the onslaught of nonprofit fundraising that’s going to come at them. Over the past half century, public policy has led these constituents to believe that their taxes are going to be providing what they may perceive used to be “charitable work.” They’re not going to be ready to take on anywhere near the kind of financial burden nonprofits are asking them to shoulder. And they are going to say to the nonprofits “Thanks, anyway, but I gave through my Form 1040!” They will continue to give about 2.2% of their income to charity.

6. So in response to that situation, another requirement for nonprofits will be to mount a terrific public education program for the donating public to help Michigan residents understand that, once again, as we were doing way back in the 1940s and 1950s, the work of charitable organizations will depend to a great extent on the generosity of the donating public, not on government.

This convergence of economic and political factors, then, affords nonprofits a perfectly marvelous opportunity for getting together, cooperating, collaborating, merging, and seeking all manner of ways to save expenses and raise tremendously increased voluntary contributions from the public. They will need to work together on the public education program. They will need to pool resources in order to accomplish their mission ever more efficiently while investing heavily in fundraising infrastructure. So there will be plenty of opportunity for collaboration between and among nonprofits.

That’s the stick. Tomorrow the carrot.