January 7, 2014

The End of Fundraising: Raise More Money by Selling Your Impact

2511693With a title like The End of Fundraising, Jason Saul’s book is not intended to be a balanced, nuanced treatment of the economics that underpin today’s nonprofit ecosystem. Rather, it’s a quasi-polemical indictment of the current modus operandi among funding sources and nonprofit “supplicants.” It’s also a much needed, critical look at the inherent—and very significant— drawbacks to how nonprofits support their work. Any nonprofit executive seriously interested in extricating his organization, even if only partly, from the current unbalanced and inefficient system would be well served to read this textbook-like study and seek to apply some of its practical advice.

Under the current system, argues Saul, are donors who, largely motivated by emotion and the “pleasure associated with giving,” write checks without any real understanding of the impact of their support. “Only 3 percent make donations based on relative performance,” he writes, referencing the May 2010 Money for Good study, one of the many citations in the book. Donors—particularly larger institutions—are not subject to, nor terribly interested in, any serious and regular review of their performance. Without any consistent feedback, or a process that weeds out those making ineffective grants, the world of philanthropy enjoys a quasi-protected status. Hard questions are rarely posed or answered.

On the receiving end, Saul argues, are nonprofits caught up in the process of spending 20 percent of their funds on raising capital, a rate five times higher than in the private sector. Moreover, because of pressure from donors, nonprofits are too focused on traditional accountability.

Nonprofits, he urges, should act quickly to remove themselves from this unbalanced world of donors and supplicants and instead understand and measure the impact of what they do. They then should find stakeholders who not only attach economic value to these impacts, but also have the ability and desire to pay for them. Nonprofits must learn, he argues, to succeed in the huge and fast-growing “social capital market,” which is approximately 20 times the size of the $300 billion philanthropic market. Shift your focus, he urges, from begging for funds from people and institutions that are donating on a purely volunteer basis, to engaging with stakeholders who want to pay for the socially beneficial impacts you are creating.

Saul’s prescription is immediately followed by examples that reflect both his agile thinking and his desire to empower those willing to try to take advantage of the social capital market. The amount of money in play, Saul calculates, is in excess of $6 trillion for every US nonprofit—including nearly $3 trillion in socially responsible investment vehicles, $500 billion in government spending on education, and $2.5 trillion on health care.

Saul details four steps for nonprofits to follow. First, he advises them to get a deep understanding of the impact they have and express it in clear terms. Second, they should identify those who want and can pay for impact, pointing to a growing coterie of corporate partners, social and impact investors, and service providers. Third, he instructs nonprofits to understand their impact on buyers’ specific needs. And fourth, he counsels nonprofits to ensure that their value proposition is clearly defined. (One interesting example comes from Minnesota, where a residential correction facility for adolescent boys is providing job training for the state’s growing bicycle industry.) With these four steps accomplished, nonprofits must then package and sell this “bundle” to the appropriate impact buyers. Again, Saul’s book lays out a step-by-step approach to the sales process and provides numerous examples.

Undoubtedly, The End of Fundraising will not appeal to all audiences, particularly those comfortably entrenched in the old donor-supplicant paradigm. And, given some of its bluntness and what could be considered oversimplification, the book is not above criticism. For example, Saul writes that the culture of nonprofits “doesn’t value knowing about impact; people don’t believe it’s possible, so they don’t even bother.” But Saul has painted a compelling and troubling portrait of mainstream philanthropy and an engaging analysis of the new social market. Most important, he has provided a comprehensive and comprehensible road map for nonprofits that want to take advantage of the tectonic change in today’s economy, where social benefits are increasingly understood to be an inherent part of all economic activity.
David Simpson is the president of GoldMail Inc., a communications service for the nonprofit and forprofit sectors. For two decades, he has volunteered and served on the board of directors of Aim High, a San Francisco-based summer program for underserved middle schoolers.

Reviewed By David Simpson | 1 | Fall 2011

The End of Fundraising: Raise More Money by Selling Your Impact

Jason Saul

240 pages, Jossey-Bass, 2011

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