Fundraising: Personal Finance Impact on Donor-Dependent Groups

Posted by Matthew Thomas

Organizations that are dependent on fundraising often do not realize the extent to which the personal finances of individuals and households impact their ability to raise funds. While some nonprofits are capable of developing funding through major donors for the bulk of their needs, other organizations – particularly churches and local community service organizations – are dependent on the regular donations from average families for the bulk of their income.

dollar being squeezed by measuring tapeOrganizations for which this is true feel economic pressure quickly when even a few of the donating constituents change or lose jobs, or are forced to relocate for work. Moreover, donors’ giving capacity limits the organization’s income capacity: and like it or not, debt – particularly the consumer debt tied to credit cards, auto loans and even cash advance outlets or rent-to-own furniture stores – plays a debilitating role in donor giving capacity.

A household that consistently is paying on revolving debt (such as credit cards) is paying significantly more for the same goods and services as a household paying up front through cash or a debit card. And as costs increase faster than income for both individuals and organizations, there is decreasing margin for increasing donations as monthly (or even minimum) payments take up a greater and greater percentage of the household income. This makes fundraising in a debt-laden society all the more difficult.

Organizations that find themselves in this predicament – where their primary donors are living with significant debt and expenses are rising faster than income – do have options.

  • If it is within the scope of your organization’s mission, your organization can sponsor personal finance seminars for your constituency.
  • You can partner with other organizations in the same predicament to share the costs of doing community education on personal finance topics.
  • You can use some of your general-purpose dollars to support low-cost or free debt relief counseling to households in your area of impact whether through your own organization or by supporting an organization that specializes in personal financial counseling.

This way, your organization can strengthen your constituency’s capacity for giving while extending your reach into your community. This will help sustain your organization’s mission through both the abundant and the lean years.

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Topics: Matthew Thomas, Design Group International, Organizational Management, Fundraising