Entrepreneurial Fundraising: Is It for Your Nonprofit?

In my experience, nonprofits can be divided into two groups based on the organizational model they deploy: those that depend on a legacy model that depends on an established donor base supporting an entrenched institution, and those that take a more entrepreneurial fundraising approach. Both models have merit and do good in the world, although the unpredictability of the entrepreneurial approach can make fundraising more difficult, but also more enjoyable. In this article, I explore the types of nonprofits for which an entrepreneurial approach is likely to be successful in an effort to help nonprofits decide if this is the right path for them.

Nonprofits that take an entrepreneurial approach, either by choice or necessity, tend to display these four characteristics:

• No clearly defined donor base. Unlike a hospital in an affluent community with wealthy “grateful” patients or a prestigious school with equally prestigious alumni, these nonprofits don’t have an obvious list of prospective donors to turn to.
• Mission-driven. Donors to these organizations are driven by and attracted to the nonprofit’s mission—ending hunger, literacy programs in underserved communities—as opposed to loyalty to an institution.
• Beneficiaries are concentrated in low-income communities. These organizations service a population that generally does not have the resources to express their gratitude philanthropically at a significant scale.
• Lean fundraising staffing. While the size of a nonprofit’s revenues generally doesn’t matter—you can be raising $100 million annually and still display entrepreneurial characteristics—entrepreneurial organizations will typically have smaller teams dedicated to fundraising. Even if large dollars are being raised, it is not generally from a traditional, large and hierarchical fundraising staff with team members who specialize in donor cohorts or geographies.

The organizations described above typically include education reform organizations, school in low-income communities or those focused on serving populations outside the U.S. Although they may have been around a long time, they’re more likely to be recently established. They will be mission-driven, although that mission may take a variety of forms.

For organizations to successfully adopt an entrepreneurial model requires three attributes:

• A boot-strap mentality. Nonprofits need an organizational willingness to take risks, be opportunistic and be uncomfortable with uncertainty. There may be no clear path to the needed philanthropy. Instead, an organization requires the flexibility needed to surge towards opportunities as and when it uncovers them.
• A big idea. When an organization can’t rely on history or goodwill to raise funds, it needs to be fundraising for a big idea. It needs to be radical—think revolution over evolution, exponential growth or impact over incremental—and have a bold vision for the future.
• A dynamic salesforce. Without the critical mass of a large fundraising staff, an organization needs to compensate by being dynamic. Highly experienced and talented frontline fundraisers and strategists are required. Leadership and fundraisers alike must be credible, and have an authentic story that will connect the donor base to the nonprofit’s mission. An effective partnership between the board and professional staffs is a further critical ingredient.

An entrepreneurial fundraising approach is not the right fit for every nonprofit. But for those with the right characteristics, leadership and dynamic approach, the rewards can be considerable. As in the traditional business world, it is often the entrepreneurs that break new ground, identify and scale new solutions and leave a lasting legacy. Philanthropists want to join organizations in that journey. By leveraging the attributes above you can get them to join yours.