Observations from the CEO of a start-up education charity, based in Europe, working in Africa to support educational institutions.

When I took over as CEO we had just over one year of funding and very weak prospects. Fundraising was the element I was probably most nervous about and so this is the issue that gave me the most sleepless nights. In a way I didn’t realize quite how urgent the situation was, which I think was a good thing as it meant I concentrated on the things that ultimately got us back on track: clarifying our strategy and narrative and embedding a strong senior team. Panicking would have been a very bad option. At the same time I did go knocking on pretty much any door I could find and I was lucky enough to have an energetic chair who found a huge number of doors for me to knock on and knocked on quite a few himself.

Ultimately, I spent a lot of time in conversations that went nowhere but as a consequence, I am now an absolute expert on what will and won’t waste my time and I think probably everyone has to go through that phase if they don’t have the previous experience. But the lesson I really want to draw attention to is about holding your nerve and the importance of believing in what you do. I believed in my team and our mission and I knew what we were delivering could make a difference. I wasn’t blindly optimistic, I knew this wasn’t enough to succeed in fundraising, but it motivated me. Even if we had to radically downsize or shut up shop I knew that right until the last day we would be having a positive impact in the world and that wouldn’t have been a waste of time. This is what allowed me not to pass my concerns onto the team beyond the senior level team and what allowed me not to panic even with them.

The other critical component was the support of my board, particularly my chair and treasurer. I never felt like I was in it alone and like good coaches, they cheered me on and helped me stay focused whenever I felt like panicking. I know several CEOs have difficult relationships with their boards and I simply don’t know how they do their jobs.⁵

FUNDRAISING CAN BE TRANSFORMATIVE

I was deeply apprehensive about fundraising when I took up my role as CEO of the Freedom Fund. I had experience in leading organizations, running programs, and other key areas of leadership, but I had never had any significant direct fundraising responsibility. What if I wasn’t good at it? Fundraising on an ambitious scale was defined by my board as one of my primary objectives. Specifically, our strategy called for us to raise $100 million in six years—a daunting target for any incoming CEO, let alone one of a start-up.

I had no choice but to embrace the challenge. My first step was to reframe it. I internalized that we had a powerful cause and strategy and the backing of some visionary philanthropists. That made the Freedom Fund an attractive partner to potential funders, and I decided we should be looking to build partnerships, not just donor–recipient relationships. Given that we had a donor board,^* I could make a strong case to potential donors: they had the opportunity to invest and participate in a powerful new initiative with like-minded partners, including by joining our board. They could become a part of something bigger than themselves and use their funding and power for good. So framed, the relationship was less transactional and more transformative in nature—for both the donor and the recipient.^*

I soon found that I enjoyed making the case to potential funders about why they should get involved. I got energy out of sharing with others how their resources could help the Freedom Fund transform the lives of some of the world’s most vulnerable people. And I discovered that singing the virtues of something you believe in deeply is not hard, particularly when the purpose is to increase your resources to do that work. We ended up raising over $100 million in our first five years, and $200 million by the end of our eighth year.

Funders who embrace their role as partners generally find the experience more rewarding and engaging than those who view their role simply as providing funding and nothing more. At the Freedom Fund, most of our big donors have become valuable, multi-year partners. Many are represented on our board.

However, even when you are successful in your fundraising, and even when you have a strong partnership with your donor, a significant power imbalance usually exists between you, in favor of the donor. This is more the case with some donors than others, but the imbalance is always there. But steps can be taken to rebalance the dynamics, as we’ll see.

REFRAME YOUR ISSUES TO APPEAL TO DIFFERENT DONORS

You can ensure your work appeals to a broader range of donors by reframing it for different groups of donors, depending on their interests. In the Freedom Fund’s case, most donors are primarily interested in supporting efforts to combat modern slavery. But others are interested in work that supports “localization”—i.e., partnerships with community-based groups and highly vulnerable populations (whether on slavery, or girls’ education, or caste issues, or climate change, or some other pressing issue).^* Others are more interested in our governance model, with a particular interest in “collaborative funds” where funders closely collaborate in the governance and running of the fund.^* Given that our work already encompasses all of these issues and approaches, we seek to appeal to all of these funders and present our work in different ways to different funders, depending on their interests.

More in Common, the community-building organization, identified that the “social cohesion” field was relatively small for funding, but that a lack of such cohesion was blocking progress on many other issues, such as climate change. So, it developed a new stream of activity focused on applying its insights on community polarization to climate change and this quickly became its single largest source of funding.⁶

The key is to ensure you are reframing existing work that is consistent with your mission, and not embarking on new work that is not core to your mission simply to appeal to donors, which will quickly lead to mission drift.

DEALING WITH POWER DYNAMICS AND BUILDING TRUST

Much as we might like to persuade ourselves otherwise, funders are usually more important to nonprofits than the other way around. Funders can invest in many different organizations in a sector they care about, or in different sectors entirely. Most nonprofits, on the other hand, have an ongoing struggle to expand their pool of donors. So, while the relationship certainly isn’t one-way—donors get a lot out of their partnership with a successful and impactful nonprofit—the different opportunities for funders and nonprofits do create a power imbalance.

Some donors are not conscious of the power imbalance, some of them ignore it, and others are not troubled by it. Most of these donors make heavy demands of nonprofits, without much consideration of the burden this places on their grantees to service the donor, diverting resources from the mission. To take a common example, many nonprofit leaders have had the experience of spending weeks completing a detailed funding proposal in the complex format required by the donor, followed by weeks of meetings and discussions and revisions to the proposal, only to be told that the application was declined. That outcome is part of the job, and of course there’s no guarantee that every funding application will be successful. But donors for their part can usually find ways to simplify the process, to reduce the time nonprofits spend on unsuccessful (and successful) applications. In fact, one of the most valuable responses a potential donor can provide is an early “no”—saving a nonprofit unnecessary time and effort.

Other donors insist on the nonprofit following the funder’s priorities, which may not be what the nonprofit has identified as the most effective strategy to tackle the issue at hand. At its most egregious, this insistence can lead to serious mission drift for the nonprofit. The CEO and colleagues should always try to work with the donor to minimize the unnecessary demands, and to ensure that the funding genuinely advances the organization’s mission and doesn’t pull it off course. In the worst-case scenario, funding that is too onerous (i.e., too restrictive, or with disproportionate reporting restrictions) or too far off mission should be refused. At the Freedom Fund, on a number of occasions, we have reluctantly pulled out of application processes or sometimes even turned down funding opportunities that were not aligned with our strategy because they would end up being more an impediment than a benefit to our mission.

However, the funder relationship doesn’t have to be like this, and for many donors, it isn’t; indeed, there is a growing recognition among donors of the need for greater trust in the organizations they fund. These donors choose to constrain their power, and work with the nonprofit to provide support best geared to achieve the nonprofit’s objectives. This “trust-based philanthropy” takes various forms. Done well, trust-based philanthropy helps address the inherent power imbalances between funders, nonprofits, and the communities they serve. All nonprofit leaders should be pushing for the funding they receive to be trust-based in nature, to the greatest extent possible.

MacKenzie Scott framed it well in the blog post in which she announced the gift to the Freedom Fund and 285 other nonprofits:

People struggling against inequities deserve center stage in stories about change they are creating. This is equally—perhaps especially—true when their work is funded by wealth. Any wealth is a product of a collective effort that included them. The social structures that inflate wealth present obstacles to them. And despite those obstacles, they are providing solutions that benefit us all.

Putting large donors at the center of stories on social progress is a distortion of their role. We are attempting to give away a fortune that was enabled by systems in need of change. My team’s efforts are governed by a humbling belief that it would be better if disproportionate wealth were not concentrated in a small number of hands, and that the solutions are best designed and implemented by others.⁷

WHY NONPROFITS SHOULD ENCOURAGE TRUST-BASED GIVING FROM DONORS

Trust-based giving seeks to reduce power imbalances between donors and their grantees, and can include some or all of the following elements:

Unrestricted giving enables you to decide where the funding can be most effectively deployed for the biggest impact.

Multi-year funding gives your organization the security to plan for the future and the ability to respond to urgent needs. Receiving a three- to five-year funding commitment, for example, fosters sustainability and encourages collaboration, as you can plan accordingly.

Simplified and streamlined processes. Nonprofits spend a huge amount of time on funder-driven applications and reports, many of which only get cursory attention. Ask donors to strip it back. They should start by understanding what the nonprofit tracks and measures already. Then they should work out what they really need to know, and what they can’t ascertain on their own account.

Transparency and responsiveness. Donors should try not to waste a nonprofit’s precious time. They should be clear about what they will and won’t fund. You should encourage them to make timely decisions and be clear about how they are making them and transparent about what they don’t know. You should ask them to involve you and other grantees in strategy development as much as possible.

A willingness to seek out and act on feedback. You should encourage donors to survey those they fund—if they are willing to genuinely listen to the feedback. In doing so, they need to be conscious of how much time they are asking of you and other grantees and offer compensation if it’s a significant amount of time, as they would a consultant.

Support beyond the check. Some donors offer support in addition to funding, e.g., communications support, leadership coaching, or other forms of support. One of the most effective ways donors can support your organization is by introducing you to other donors in their network. The power of peer donor validation can be an effective way to build relationships with new donors.

THE POWER OF GOOD STORYTELLING

How do you go about making the case for investment in your sector and organization? One of the most effective ways is to tell an engaging story. Nonprofits have the advantage of having a compelling cause to advocate for. The research shows that storytelling is a powerful fundraising tool.⁸

As a leader, you are the main spokesperson for your organization, though you shouldn’t be the only one. Other staff, particularly the individuals closest to those you serve, are well placed to talk compellingly about your work, as are those you serve (provided it’s not done in an exploitative way). But often, the expectation of donors, or conference organizers, will be for the CEO to be the front person telling the story about your organization’s work.

Many people are not comfortable with public speaking, or even in putting together a story about their work. But it’s an important skill, so if you are one of those people, you need to invest in developing your public-speaking and storytelling skills.

CASE STUDY

A Framework for Powerful Storytelling

When it comes to storytelling, I often draw on a framework developed by renowned community organizer Dr. Marshall Ganz. His first activism was with the Freedom Riders in the ’60s, supporting the enrollment of African American voters in the American South. Then he worked with legendary activist Cesar chavez mobilizing farm workers in California to fight for more humane labor conditions. After returning to Harvard, Ganz completed his PhD in sociology and developed his three-part public narrative framework: the story of self, the story of us, and the story of now. In Marshall’s words:

A leadership story is first a story of self, a story of why I’ve been called. Some people say, “I don’t want to talk about myself,” but if you don’t interpret to others your calling and your reason for doing what you’re doing, do you think it will just stay uninterpreted? No. Other people will interpret it for you. You don’t have any choice if you want to be a leader. You have to claim authorship of your story and learn to tell it to others so they can understand the values that move you to act, because it might move them to act as well.

The second part, the story of us, is the answer to the question of why should we, the audience, engage. Why does it matter to our community? Why should we take action? . . .

And the final part, the story of now, is the answer to why should we act NOW? It speaks to the realization that there is a problem out there that we as a community need to address, and the time to act is now. It’s a way of trying to bring balance between the problem we now perceive and our power to help address it.⁹

There is a narrative arc to a story told in this way. Over some years now of doing this, I’ve found that people want to know why they should listen to me—e.g., why I care about the cause, my experiences of meeting survivors and perpetrators (story of self), why they should engage with our cause—e.g., how trafficking, and especially forced labor, touches all of us through goods we consume, and our common humanity (story of us), and why they should take action now—e.g., to end horrendous and conscience shocking abuses taking place as we speak (story of now). Applying this framework to any cause you believe in will help you paint a compelling picture as to why your audience needs to engage and act.

Introducing your audience to the reality of an issue you are working on is another effective way to tell a story. You can use blogs, videos, photos, and social media. Producing a video can require a significant investment of resources, but that has to be weighed against the return. A well-designed video can last the organization for years and be used on the website as well as for events and presentations—so it can be an investment well worth making.

Site visits are also a highly effective way to expose donors to your work, giving them the opportunity to meet those your nonprofit serves. For donors and others to see firsthand what your organization does can be transformational. That’s why the big humanitarian charities organize for donors and celebrities to travel to the countries they work in. But these trips carry risks and need to be done respectfully and sensitively, so as not to become “poverty porn” where the donor or other guests are flown in to see community members perform on demand¹⁰—that’s the worst reinforcement of damaging power dynamics. The visits should be as unobtrusive as possible. It’s vital that community members understand the reasons for the visits and parameters. Permission should be obtained before photographs are taken, and safeguarding measures strictly complied with. Done well, site visits offer a deeper understanding of the work your organization does and can be hugely persuasive with potential donors, bringing them face-to-face with the reality of the cause. Site visits should be in your armament of fundraising tools but handled with care and respect.

COMPETITION FOR FUNDING

A perpetual lament for nonprofits is the lack of available funding. That has always been, and will remain, the case. However, the claim is also worth interrogating. Usually, what is meant is: not enough funding exists for the individual nonprofit or for the sector. But neither of these are constants.

For a start, the scale of actual and potential philanthropic funding is huge. According to Giving USA’s annual report on nonprofit donations, US charitable giving in 2021 totaled $485 billion,¹¹ a 4 percent increase since 2020. These numbers are difficult to comprehend. That said, most philanthropic funding is directed to large institutions—the majority of philanthropic giving goes to churches, universities, hospitals, and museums. In contrast, most nonprofits remain small—92 percent of US nonprofits spend less than $1 million annually, and 75 percent spend less than $100,000.¹²

In order to access a significant share of the available funding, your organization needs to make the case that it’s an effective vehicle for donor investment. The challenge in doing this is that you are often implicitly (or sometimes explicitly) comparing your performance against your peers. That’s not ideal. But, on the other hand, to the extent that resources are limited, and if you believe your organization has a compelling purpose and strategy, then you must mobilize the resources you need, even if that means differentiating yourself from peers.

SAYING NO TO FUNDERS

Just as important as raising funding is knowing when to say no. Many leaders struggle with this, understandably. After all the effort you and your team put into mobilizing funding, turning down a donor can be very hard.

But you might need to do so. For example, if the funding comes with demands attached that may drag you significantly off mission. Or funding that may be unduly demanding of your time and resources. For example, if you are a large or midsized nonprofit, then filling in a forty-page proposal and going through multiple rounds of interviews for a $20,000 grant (which comes with its own onerous reporting requirements) may not be worth your time and effort.