Fundraising in the Social Sector: Common Challenges
Jan 14 , 2021 |
What Roadblocks do SPOs Face in Securing Funding?
Pratyush Rawal & Radha Arakkal
It will not be incorrect to claim that fundraising ranks amongst the top three challenges faced by most non-profit leaders.
Researching prospective donors, crafting a pitch deck, securing the first meeting, making the actual ask, writing grant proposals, reviewing budgets, reporting impact to donors, and/or organizing a crowdfunding campaign have surely given sleepless nights to all fundraisers. No doubt fundraising is considered ‘the other F-word’ for non-profit organizations.
Leaders for Social Sector (ILSS), we conducted a detailed study on
the development sector fundraising landscape, the main challenges that
organizations and social sector leaders face while raising money, and the best
practices that some of the most successful fundraising organizations
follow. We interviewed over 70
non-profit leaders, donors, experts, and intermediaries and had over 50
informal conversations for this study.
In this first article of a two-part series, we enumerate the following key challenges faced by non-profits while fundraising.
- Communication Challenges are the primary
struggle for many social purpose organizations. For example, many small and
medium organizations addressed the difficulty in making strategic pitch decks,
with a strong problem statement and solution. While most organizations
facilitate transformative projects with their communities, effective
storytelling as a skill is difficult to hone. Organizations also often lack the ability
to write complex grant proposals. Moreover, we found organizations are
generally unable or unwilling to spend on marketing and communications,
probably because the leadership and/or the donors do not understand the
benefits of brand-building as a part of org strategy. This prevents these
organizations from establishing themselves as strong and trustworthy brands.
Very few organizations make full use of technology, including social media, for
brand-building and retail fundraising.
- Networking happens to be another huge
challenge, especially for small organizations. In the absence of an evolved and
mature non-profit fundraising environment in the country, fundraising on many
occasions is driven by personal connections and networks. Smaller organizations
often have very limited access to these networks, an advantage that large
- Recruiting, training, and retaining fundraising talent is a concern across the social impact sector in the country. While
everyone in the sector understands the criticality of the fundraising, not many
professionals are keen to join the fundraising vertical of the organization.
There is also a dearth of funds channeled toward training and capacity
- Many organizations find it
difficult to maintain strong
relationships with donors. Social development is a slow and gradual
process, and fundraisers struggle to show results on a quarterly basis, which
many donors ask for. Organizations also mention how the power dynamics with the
donor makes fundraising a tough task.
- The difficult regulatory framework, especially with respect to foreign
funds, is an important pain-point for non-profit fundraisers. Navigating the
plethora of complex laws, regulations, and reporting mechanisms that govern the
Indian non-profit space, reduces bandwidth allocated to raising money.
- Apart from a few large
non-profits, most organizations have not been able to harness the power of Retail Fundraising, which is often seen
as a cost and not as an investment. It is intriguing that while 61% of the
social sector funds came from everyday giving in the US last year, this share
was just 6% in India (Sattva Everyday Giving report, 2019).
- Finally, the reluctance in asking and fear of rejection
are among the biggest behavioural challenges for fundraisers. In the ILSS Fundraising Program, we incessantly
reiterate our core mantra: “If you don’t
ask, the answer is no”.
This is not to say that fundraising is a sad, hopeless field. In our research we came across several organizations – both small and large – that ace fundraising, and are the top choices for donors, institutional and individual alike. These organizations strongly believe that social change is impossible without successful fundraising.
We discuss these best practices in the second article of this two part series.
Become a change leader. Apply now for the ILSS Leadership Program.