Fundraising in the Social Sector: Common Challenges

Date : Jan 14 , 2021 | Opinion

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.

At India 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 organizations enjoy.
• 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 building. 
• 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.