Solving Nonprofit Money Woes Means Doing More Than Building a ‘Culture of Philanthropy’

To the Editor:

I really appreciate The Chronicle’s special report on the dysfunctions of fundraising (“Killing Sacred Cows,” February 29). I took particular interest in the Evelyn and Walter Haas, Jr. Fund’s new report, “Beyond Fundraising: What Does It Mean to Build a Culture of Philanthropy?,” discussed in an opinion column in the same issue.

I applaud the Haas Fund for taking a pioneering interest in, as they put it, “understanding how to break out of the nonprofit sector’s chronic fundraising challenges.”

Unfortunately, I don’t think their report will move the needle on the sector’s money woes. In the hope that debate spurs greater change, and because of Haas’s expressed desire to open a conversation so it can “learn out loud,” I offer my concerns about the “Beyond Fundraising” report.

As Linda Wood, senior director of leadership initiatives at the Haas Fund, asserts in the report, there must be a fundamental change in how nonprofits approach fundraising, and “simply adopting new tools and techniques may not be enough.”

“Beyond Fundraising” starts where Haas’s 2013 report “UnderDeveloped: A National Study of Challenges Facing Nonprofit Fundraising” left off: The lack of a culture of philanthropy is the most important issue holding nonprofits back from fundraising success. The new report is an attempt to understand what a culture of philanthropy is and how to encourage it.

The report delineates four necessary components to a culture of philanthropy and provides a list of indicators for nonprofit leaders to assess whether they possess one. It also offers a list of “guiding questions” leaders can ask to build a culture of philanthropy and a list of roles development staff and funders can play in this process.

While I don’t disagree with any of the indicators, questions, or roles the report describes, I don’t think that any of them — or even their sum total — will solve the lack of financial sustainability at a particular nonprofit, let alone in the nonprofit world over all.

This is because only looking at fundraising — the pursuit of philanthropic dollars, which make up only 13 percent of all money flowing to nonprofits — is a fundamentally flawed approach to understanding money in the sector. My bias has always been to move from a broken fundraising approach to a more strategic and holistic financing approach.

I agree that individual nonprofit leaders are part of the problem, but they are just one part. Often their troubled approach to money is simply a reaction to a dysfunctional system.

Certainly we need to move away from some ineffective practices, such as being reactive rather than strategic about money, not calculating fundraising activities’ return on investment, not aligning money and mission, and allowing boards to dismiss their fundraising responsibilities.

But I worry that by scapegoating the shortcomings of individual nonprofits, we ignore the larger financial dysfunction of the sector. Rather than pull back the curtain on the systemic hurdles causing money woes, I fear that this report lays much of the blame at the feet of individual nonprofit leaders.

To my mind, the sector’s financial problems run much deeper. If we truly want to address those problems, we must have bigger conversations and ask harder questions, such as:

• Why is there such a lack of financial acumen among both nonprofits and their funders, and how do we solve that?
• Why is long-term organizational and financial planning not encouraged and supported throughout the sector?
• Why is there not enough investment in the financial function of nonprofit organizations — the staffing, systems, technology, planning, and marketing necessary to build sustainable financial models?
• Why aren’t there many, many more grant makers like the Haas Fund discussing and investing in solutions to the sector’s money problems?
• Why are we still focusing on philanthropic dollars alone when we need to understand and integrate money as a whole into social-change efforts?

And that’s just a start.

I would like to see the nonprofit world as a whole enjoy a more robust money ecosystem, including more money for building up financial functions, more research about money in the sector, more knowledge-building about what works and what doesn’t. In essence, I would like to see more of what the Haas Fund is doing but around the much larger questions about money in the sector, not just around fundraising from private sources.

My fear is that if we place the full weight of nonprofit financial dysfunction on the shoulders of the cultures of individual nonprofits, or if we look only at fundraising for solutions, we shirk our duty to dig deeper and remedy larger, structural dysfunctions.

The Haas Fund has started an important conversation, but I would love to see this effort grow to become a bigger conversation about how we solve the endemic financial challenges nonprofits face.”

Nell Edgington

President
Social Velocity
Austin, Tex.