3 Fundraising Myths That Are Polluting Your Thinking

There's a massive non sequitur polluting many nonprofits' thinking: "our donors give because they want us to achieve our mission; therefore we will focus on telling them about our administrative operations."

It's a dangerous fallacy -- one that perverts the way nonprofits structure their very strategy, and one that invariably leads to less impact.

Weeding out these common myths will go a long way towards creating nonprofits that actually focus on getting things done -- ie. changing the thing their organization exists to change -- and in the process build a more engaged and bought-in community.

Myth #1: Your Amount of Overhead Matters

We heard a pretty common refrain the other day in a meeting with an advocacy organization: "we should be telling donors our overhead spending is lower than most nonprofits."

Somewhere along the line the notion took hold that you can judge a nonprofit or charity's performance by the proportion they spend on 'overhead'. It's a harmful idea. Donors want to see impact, not frugality.

What sort of things count towards overhead? The money that's invested into fundraising efforts (to raise more than the amount invested); essential expenses for any business like rent, insurance, etc; oh and that little line item that may help you succeed: staff.

Especially for advocacy organizations -- which exist to have people ('advocates') agitate for change -- but equally for any organization, people matter, and investing in them is the only way you can achieve impact. In fact, most of my favorite nonprofits are all overhead. They hire smart people and use limited resources effectively to create change in the world. That's worth investing in.

The danger of the overhead myth is not simply that some donors may avoid organizations that have a high overhead ratio (just see what happened to the wildly successful AIDSRides in this compelling TED talk), the danger is also in the way it prevents organizations from structuring and investing for impact in the first place -- overly hesitant to invest in the people, tools and technology that give their well-resourced opponents the upper hand.

(Agree? You can sign the pledge and spread the word at The Overhead Myth.)

Myth #2: People Won't Give To 'Campaigns'

You've probably come across this genius marketing strategy before: "$150 will buy clean water for one village"; "$35 will buy school meals for one child for a month"; "$50 will buy one goat"... You get the drill: people are more likely to give money for something tangible and measurable than, say, what the organization will actually spend the donation on.

The psychology is sound, but it's hardly transparent, and it gives rise to a big myth: "we can't ask supporters to give to the actual campaign which may potentially solve this issue en masse."

Let's pick on Oxfam (for no better reason than I'm using the great image of their goats above). When Oxfam, who pride themselves on their 'low overhead', ask for your money it's all about the itemization: give us money and we can buy a tool to help a farmer or a mosquito net to save one person from malaria. But in reality, the most impactful work they do on those issues are through advocacy.

Get a foreign company to stop land grabs in Africa, you help ten thousand farmers. Get a government to make malaria drugs readily available, you save a million lives. But instead their fundraising efforts are focused on reassuring you "only 6 cents in the dollar" will go to campaigning that tries to do those things. I'd much prefer my donation results in a wholesale solution than a piecemeal bandaid.

And guess what? It works: if you frame it correctly, people will give to campaigns. The key is in demonstrating you have a realistic plan, and the gap between that plan's success and failure is your donation. Some of the most successful fundraising asks I've seen have been framed along the lines of: "we know Decision-Maker X responds to this kind of pressure, and their vote is the deciding factor. But we need $10,000 to [insert campaign action here]."

If you don't believe in your campaign's strategy, then why are you doing it? If you do believe it will work, then chances are your supporters will agree. Ask them to buy into it.

Some of the most successful fundraisers only ask around campaigns. Avaaz -- an incredibly impactful organization which asks solely for campaign support -- raised $14.5 million in donations in 2013. Obama raised over $720 million the year before for his political campaign. None of these donations were tax deductible (yet another fundraising myth: unless you are a wealthy philanthropist or a hedge fund looking to write off your excesses), nor were solicited on the promise that it wouldn't be used to pay hardworking staff. Yet people still gave in great numbers regardless.

The same can be said for invented fundraising 'moments' (like 'end of year' campaigns in the US). The best time to ask for money is when you have a compelling need for it, in a campaign that is backed by a solid strategy. Tell your supporters why you need it, and if your plan makes sense, and they agree with your mission, they will give.

Myth #3: Transparency Is Risky

There's another common thread running through all the above: organizations trying to fudge and obscure how they actually operate in order to win favor with their supporters ("It's ok, we don't actually pay our staff what they deserve -- trust us with your money!"; "we'll spend this donation on an actual goat, we swear!"; "none of THIS donation will be spent on overheads, it will go 100% to this particular program!").

What a shaky foundation to build support and community on.

Here's a novel idea: treat the people you are asking to give you money with respect. That's best done through being transparent. Most organizations' instinct is to shy away from transparency, as if -- shock, horror -- telling your donors what you actually do is going to scare them away.

It may just have the opposite effect. In Australia, when a new Prime Minister announced he was going to finally issue a formal apology to the Indigenous Australians who were forcibly taken from their families, we asked GetUp supporters to chip in to fund travel and accommodation for the survivors to hear the apology in person -- an important healing experience for them and the nation.

The fundraising ask was wildly successful. So wild, in fact, that we raised far in excess of what we could logistically spend in such a short amount of time for the amount of people we could send to the capital to hear the apology. Ask yourself, what would have your organization done in such a situation?

The Red Cross found themselves in a similar situation after the Haiti earthquake. Raising more money than you know what to do with can be a worse problem than it sounds -- as recent investigations into how they spent the money have shown.

Instead, like a tech nonprofit profiled recently by my colleague here, we did the transparent thing: we told donors we had raised too much money for what we had asked them to contribute to, and offered them their money back. If in the alternative, we suggested, they wanted to let us keep their donation, we would instead put it towards GetUp's other campaigns around Indigenous equality.

Several thousand people had donated originally, can you guess how many asked for their donation back?

Not a single one. In fact, the effort to be transparent created so much goodwill amongst the donors that many gave again in response to being asked if they would like a refund, to applaud the initiative.

Now there is a fundraising figure to be proud of. Treat your supporters with respect, focus on impact, and there will be no need to fudge anything.

I'd love to hear your thoughts. Share your comments here or connect with me on Twitter @edcoper.