Not Every Nonprofit Should Exist Forever…And That’s a Fundraising Question

Board RelationsFundraising GeneralNonprofit Planning
Written By Susan Kahan

Here’s a statistic for you:

There are 1.9 million registered nonprofits in the United States. Over 1.5 million of those are charitable organizations, a 501(c)3. The rest are other types of nonprofits, like associations, lobbying groups, labor unions, etc.*

 

25 years ago, there were only 819,000 charitable nonprofits – an approximate 85% growth factor to the 1.5 million we have today!**

Why should you care?

Because while there has been extraordinary growth in the sector, what worked before to make a nonprofit sustainable (and hopefully thrive) may no longer be a successful strategy.

In fact, not every nonprofit is going to be around forever. And frankly, that shouldn’t even be the goal.

 

Let’s look at a few more stats:

1)    We see an alarming trend of less households giving each year. In 2000, about 2 out of every 3 households donated to charity. As of 2020, that number was down to 46.9%.***

2)    This is coupled with an aging population in the United States. In 2000, there were about 35 million people over 65; in 2020, that grew to 54 million, and an estimated 80 million people in 2040!****

3)    And then consider that the baby boomers (those born between 1946-1964) hold an estimated $85.4 TRILLION***** (that’s with a “t”), which is over 50% of the nation’s wealth, and yet only 20% of the population.

We have a massive amount of needs changing when it comes to wealth, generations, and charitable giving.  

Our world is changing. Neighborhoods, health needs, the economy, technology are all changing. And nonprofits that existed in one format may no longer make sense in the current environment, especially when they struggle with acquiring new donors and retaining their current ones.

 

So what if a merger or consolidation with another nonprofit (or even nonprofits) was considered?

  • What if that wasn’t thought of as a bad thing?

  • What if you were able to think of this as a way to collaborate on processes and remove friction?

  • What if you were able to communicate to funders that you were excited about a formal partnership and their support would go further to solve the problem, because there was already community alignment?

  • What if you were able to think of this as a way to solve the problems your nonprofit states it is trying to solve, and are actually, wait for it, solving?

  • What if you moved beyond what you’ve always done, “Because this is how we do things,” to “this is what we need to do now?”

There’s an old Jewish joke:

There was a Jewish man stranded on a deserted island. When the rescuers arrived, they asked him how he dealt with his time alone. And he showed them around and the two synagogues he built. They asked, why two? He shared, well this is the synagogue I go to. And this other one, well, I wouldn’t be caught dead there.

 

And yet, I’ve been a member of a synagogue that is actually the merger of three separate congregations! One came to the table with a building, one with a healthy bank account, and one with a large membership (I mean, seriously, the jokes write themselves).

It’s been quite successful.

So as the year begins, you might be thinking if this is a viable option for your organization.

As you go through the process, you’ll probably consider:

  • What do you struggle with now that a merger might solve?

  • Who might make sense to merge with?

  • What will the end result look like – new/altered/removed projects? Leadership? Etc.?

 

But beyond that, what about your fundraising? What should you consider now BEFORE the change (or even the potential crisis when things HAVE to happen):

  • If one (or both) organization(s) has an endowment fund with restricted gifts, what will you do?

  • How will you merge multiple CRM databases, appeal cycles, and donor stewardship plans?

  • How will your donors feel about this? When should you communicate to them and that this is a GOOD THING and not a failure?

  • What about your staff? How can you ensure the culture between two organizations can mesh well together so that everyone is excited about the change, not dreading it?

 

These are not easy questions to answer. And probably will take a lot of discussions, compromise, and board involvement. 

But your donor relationships are CORE to the future success of any nonprofit’s new structure. They just can’t be the last thing you think about.

 

So let me ask you –

  • Do you have any sense of when your CEO is retiring? Maybe they were the founder of your nonprofit, and the momentum is hard to carry on without them.

  • Think about if your nonprofit has historically served a certain community, but that community has evolved, and the needs are no longer the same.

  • Think about if your nonprofit serves a very niche community – maybe a rare medical disease – and the funding is hard to grow since so few people have even heard of the disease you specialize in.

 

You might need some help to figure this out before the big decisions are made.

Because you don’t want to walk into growth, succession, or consolidation conversations without fundraising clarity.

The need for you to position your nonprofit for long-term sustainability has never been more important.

That will take someone like Sapphire Fundraising Specialists to get you there. When you’re ready, let’s talk.

Let's talk
Susan Kahan
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