Nonprofit organizations are not well known for risk-taking behavior. Chances are, the charities you support look very similar to the way they looked 10 or 15 years ago. The programming is the same, and they are using the same tired old fundraising tactics.
If you are the leader of a nonprofit, consider this: if you were a prospective donor, would you want to donate to your organization?
Have you seen an uptick in donations, or are you still tapping into the same pool from several years ago? Are you still sending out the same newsletters that look like they were designed in 1999, or have you invested in a sleek new social media campaign to help rake in donations?
Risk-taking matters when it comes to advancing your mission and best serving your target population. Being able to take risks and say “I know this seems scary, but I’m confident it will be worth it” can make the difference between scraping by on current donations or flooding your organization with a brand-new donor pool.
What Is Risk-Taking for Nonprofits?
Being able to go against what feels safe, offer programs that seem out-of-the-box, or launch an unconventional social media campaign is all considered risk-taking in the nonprofit realm.
While these don’t seem like big, adventurous leaps for most industries, the nonprofit industry is notorious for playing it safe. Understanding why most boards of directors are unwilling to make a risk-taking leap into the unknown is the key to breaking down opposition and driving your organization forward.
In a wildly popular TedTalk, Dan Pallotta discussed risk-taking in nonprofits. He states that common nonprofit problems, like not being able to fix homelessness or cure breast cancer despite endless support, all come down to organizations playing small and being scared to take risks.
He says, “And the answer is, these social problems are massive in scale, our organizations are tiny up against them, and we have a belief system that keeps them tiny. We have two rulebooks. We have one for the nonprofit sector, and one for the rest of the economic world.”
Why Are Nonprofits Against Risk-Taking?
Nonprofits tend to stay away from risk-taking because money, time, and resources are limited and valuable. Spending money on a new program or marketing campaign that may not work can be expensive and burn up important resources.
Since organizations do not generate income, it is very difficult to pull in the staff or specialists who can successfully plan and execute a program that deviates significantly from the norm. This is why many organizations, especially those on a smaller scale, tend to produce a lot of the “same ol’, same ol’.”
However, it is due to this unwillingness to embrace change and innovative thinking that nonprofits limit their potential and their ability to acquire talented, experienced workers. When an organization promotes the same programming and same messaging year after year, the ideas become stale. In a society that is used to being fed new information minute by minute, it is difficult to continue to support an organization that does not try new things.
Dan Pallotta also discusses how the public does not like to see nonprofits use their donations on advertising and marketing. He says,
So we tell the for-profit sector, “Spend, spend, spend on advertising until the last dollar no longer produces a penny of value.” But we don’t like to see our donations spent on advertising for charity. Our attitude is, “Well, look, if you can get the advertising donated, you know, to air at four o’clock in the morning, I’m okay with that. But I don’t want my donation spent on advertising, I want it to go to the needy.”
This perception of how donations should be spent limits nonprofits’ willingness to jump headfirst into a new campaign. They are left playing a delicate balance of trying to grow the organization while also appeasing the people who support their very existence.
Risk-Taking Donors: How to Get Them on Board
Nonprofits should embrace risk-taking despite the idea that they have to use funds in a particular manner. Major gifts officers can mitigate this to some extent by having in-depth conversations with major donors about the true needs of the organization.
While many major donors assume their funds will go towards helping hungry children or finding a cure for a terrible disease, they often do not understand the behind-the-scenes workings of the nonprofit.
In this case, information is your friend, and showing prospective donors exactly how their dollars can make the biggest impact is essential. If you have set annual goals and donation projections for the upcoming years, you need to show them how their donations can help you meet those targets, and then how you will use the money.
When major gifts officers and executive directors have conversations about marketing needs and programming innovation, they can ease major donors into the idea that their contributions can be better utilized to propel the organization forward.
Millennial Donors: Bold Philanthropists
As we enter into a period of new donors through generational wealth transfer, it is possible that donors will be more willing to help fund innovative ideas. As a generation that is used to being bombarded with marketing tactics and influencers, millennials understand the importance of risk-taking as a means of growth.
Since millennials are fans of seeing an immediate impact from their donations rather than holding on to end-of-life planned giving, directly soliciting them for contributions specifically designated for breathing life into the organization is an easy way to fund such measures.
Millennials are leading the way when it comes to societal change and given their wealth and resources, they would be much more likely to go all-in on an idea or concept if they felt that it would benefit the organization in the long run.
As a society, we do not give nonprofits the luxury of time for failure. Due to the funding structure of charities, people want to see immediate results. The second something appears to go awry, donors get antsy and may start voicing their opinions. It is very difficult for executive directors and boards to go against what their largest funding sources believe.
Millennials have been patient their whole lives as they have waited to acquire jobs, real estate, and investment portfolios. As they see the importance of time on investments, they may be a group that is generally more tolerant of the ups and downs that come with trying something new.
This generation of donors is also no stranger to risk-taking. As a group that is deeply interested in entrepreneurship and a “hustle” culture, there is an ingrained understanding that risk-taking is necessary to create anything worthwhile.
The truth is, we can’t make progress if we don’t embrace risk-taking. In the nonprofit world, keeping things new and dynamic is essential to growing the organization and attracting new donors.
Balancing the demands of donors, public opinion, and actual progress is a delicate act. Nonprofit leaders must charge full steam ahead with risk-tasking, however, if they are going to advance the organization and further support their mission.
Organizations that do not figure this out quickly are in danger of becoming stagnant and dated in the eyes of younger donors. These nonprofits must stop letting fear of failure get in the way of achievement.
We are entering into a new age of giving with new donors who have big expectations and who understand that the world works differently now. They may be more willing to gracefully accept the changes organizations need to make in order to truly make an impact in society.