Do Nonprofits Think Too Small?

Advocating for a cultural shift within nonprofits, one that embraces investment in talent, technology, and development systems. To elevate the sector, nonprofits must adopt a mindset of abundance and growth rather than scarcity and restriction. This involves educating boards and stakeholders about the true value and impact of investing in their organization’s capacity to fundraise and operate efficiently.

Host Julia Patrick welcomes Claire Axelrad, a seasoned expert in the nonprofit sector with over 30 years of experience. Drawing from her extensive background as a director of development and now a consultant, Claire begins by reminding us that nonprofits often perceive themselves merely as cost centers rather than potential profit centers. This mindset, she argues, limits their growth and impact. She goes on to challenge this view by suggesting that fundraising should be seen as an investment with substantial returns, both socially and financially. She offers, “Fundraising has a remarkable return on investment (ROI). If you spend $0.10, you get $0.90 back. That’s a 900% ROI. Businesses with such returns would be turning cartwheels.”

The sparkling conversation looks into the prevalent issue of nonprofits undervaluing their work and underinvesting in their infrastructure. Claire points out that this is partly due to the sector’s focus on minimizing overhead costs, which is often seen as a badge of honor but is counterproductive. She comments to Julia, “Inferior investments lead to inferior results. If you spend more on fundraising effectively, you enlarge the pie substantially, allowing you to achieve more with greater resources.”

One of the big challenges discussed is changing the perception of donors and board members about overhead costs and investments in the organization’s capacity. Claire suggests, “Stop touting our low cost of overhead because that just perpetuates the myth. Instead, bring in businesspeople to talk about how they invest in marketing, sales, and development.”

Claire Axelrad’s insights call for a rethinking of how nonprofits operate and present themselves. By viewing fundraising as a critical investment and fostering a culture of philanthropy, nonprofits can enhance their impact and sustainability. This shift requires ongoing education and communication within the sector and with donors, promoting a mindset that values and supports growth and effectiveness.