Fundraising is the primary way that many nonprofit organizations are able to accomplish the work that they set out to do. That being the case, many nonprofits are more concerned about the benefits of fundraising but do not consider the risks involved with careless fundraising. The purpose of this article is to communicate the risks of careless fundraising and identify ways to prevent from those risks becoming a reality.

RISK #1: Not being prepared for potential donor trends

Today’s donors have high expectations once their funds have been given to an organization. Acknowledgment for the donation/gift is an expectation rather than a nice touch. They also want to know exactly what you plan to do with the money that they provide, including the financial support that will enable you to accomplish the mission that you are working to accomplish. If your fundraising programs do not adapt to changing donor preferences, your organization can risk becoming a victim of a competitor. Be ready to respond quickly to a rapidly changing world of donors.

• SOLUTION #1: Acknowledge the gifts of your donors quickly. Recognizing that donors are now demanding more customized communications and engagement on the part of their beneficiaries. Give people a way to stay in touch with them and encourage them to become active by offering them regular updates or sponsoring a fun or challenging fundraiser. Donors are more savvy than ever and they expect to hear your plans, decisions, and activities in writing. So, disclose those decisions in writing as often as you can.
• SOLUTION #2: Build relationships with your donor base. Talk to your donors and try to learn what they want and need from you. If you do not understand donors changing attitudes and preferences, make sure you stay in touch with them for as long as possible. Find relevant ways to communicate and hear from your donors and make sure you keep in strong consideration what they require.

RISK #2: Putting too much trust in singular fundraising campaigns

Many nonprofits are tempted to believe that big, easily-produced fundraising campaigns will accomplish miracles. But sometimes that does not happen. It would be wonderful to be able to reach out to tens of millions of people in a very short time to capture their interest in your cause. Miracle fundraisers can sometimes occur, but be cautious about planning campaigns that will cause them to be highly unsuccessful. Another byproduct of relying to heavily on certain fundraising campaigns is that it dissolves trust with your donor base. Donors will begin to questing the stewardship of funds and the management of the organization if a nonprofit is not consistently planning on ways to stabilize funding. Ultimately, it is more important to steward your donor base well than try and foster growth through a “viral” fundraising opportunity.

• SOLUTION #1: Reassure constituents of fundraising priorities. It is important that leaders actively encourage their supporters to give and receive constructive criticism from their donors when their activities are not performing as expected. Pay attention to how donors may react to your fundraising campaigns, and respond well when negative comments are made about your organization. Likewise, the organization leaders should take ownership of the process and overcommunicate financial priorities.
• SOLUTION #2: Identify ways to increase partnerships with current donors. Rather than trying to put all eggs in the viral fundraiser basket, find ways to bolster current relationships. Donors respond positively to programs, initiatives, and communication efforts that leaders of their organizations initiate or lead. Display a professional image to engage donors and get them to act in a meaningful way.

RISK #3: Improper gift stewardship

Raising funds is only one part of the fundraising equation. The other important part of the process is how the funds are used. If recipients of a donation request that money be used for a particular cause, you have to plan carefully where the money will go. Donors might be frustrated or demand the money back from a donor who gave the gift illegally or improperly. This lack of good financial stewardship can cause legal issues as well as reputation issues.

• SOLUTION #1: Set up guidelines to allow donors to decide what they should do with their money if a donor asks that the money be spent on a specific project or program. Give donors a clear sense of what they expect from you, and ask them for their permission before you ask them to give a contribution. A gift acceptance agreement that clearly defines who is responsible for what and how gifts are to be spent may help keep donors informed and enable them to feel confident about giving to the charity.
• SOLUTION #1: Make sure donors are giving for the right reasons. If a donor gives a gift to a cause or organization it believes will be of great value to it, do not receive gifts from organizations which will help the donor instead of the cause or organization. Donors can be emotionally influenced by those giving gifts that will support themselves rather than a nonprofit.

Fundraising and donor stewardship are vital to the success of nonprofit organizations. As such, nonprofits should prioritize donors and the fundraising process by utilizing a donor management system. MyDonors is an effective and affordable donor management system to help ensure you demonstrate the value that your donors deserve. MyDonors is part of MyCommunity, which exists to build relationships and tools that equip organizations so that they can maximize their impact. Our suite of tools is designed to help organizations of all sizes focus on their mission without worrying about the logistics. We understand the importance of building strong relationships, so we provide the necessary tools to maximize impact and make a difference like our easy-to-use platforms MyDonors and MyVolunteers. Likewise, MyNonprofitCoach equips nonprofits with the training they need to be successful. Schedule a demo for any of our solutions here.

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Source: https://nonprofitrisk.org/resources/e-news/top-3-fundraising-risks/