What is wrong with the non-profit sector?

gdpI am sicker than a dog and my mind is foggy, which is why I couldn’t post yesterday. However, the thought of not posting two days in a row is inconceivable to me. So, I find myself sitting here staring at a blank screen wondering what I should type. Rather than wax poetic about a current event or best practice, I’m going to share with you a question that another blogger touched upon a few months ago. Ever since reading it, I just haven’t been able to get it out of my head. Are you ready? Because here it is:

Why is it that the non-profit sector hasn’t been able to gain any ground over the last forty years and remains at 2% of GDP?

I have a few guesses.

  • It could be the for-profit sector is very strong and its growth outpaces our sector, which in effect keeps us from gaining ground.
  • It could be how many new non-profit organizations register every year, and somehow we’re cannibalizing ourselves.
  • Perhaps, Americans are only generous to a point.

I really doubt all of these explanations. I blame these silly guesses on whatever ails me.

What I really think is happening is much more simple.

  • I believe non-profit organizations are bad at maintaining donor relationships.
  • The annual donor turnover rate is over 50%.
  • Most donors don’t make a second contribution after making their first one.
  • Very few people every make it past five consecutive contributions to any one charity.

The result is something like a hamster wheel effect for the average non-profit organization, and it has locked the sector into being just 2% of GDP.

OK … I’m going to run off to the doctor and get a throat culture. While I’m doing that what other reasons can you think of that might answer the question posed at the beginning of this post? Please scroll down and share your hypothesis in the comment box below.

Here’s to your health!

Erik Anderson
Founder & President, The Healthy Non-Profit LLC

About DonorDreams

Erik got his start working in the non-profit field immediately upon graduation with his masters degree in 1994. His non-profit management and fundraising experience numbers nearly 20 years. His teachable point of view around resource development is influenced by the work of Penelope Burk and those professionals subscribing to a "donor centered" paradigm. Donors have dreams and it is our responsibility to be dream-makers because donors are not ATMs.

Posted on August 14, 2013, in Fundraising, nonprofit, resource development and tagged , , . Bookmark the permalink. 3 Comments.

  1. Feel better. Also focus on stewardship.

  2. I think non-profits are terrible at telling their story. Why do they exist (and forget their standard mission statement)? How do they make life better in their communities? They are too busy saying what they do and not how it affects either the people they serve or their communities. That’s my theory anyway.
    Kate Bayer

    • Kate … I couldn’t agree more. Additionally, I think fundraising volunteers (and board volunteers) get lulled into a false sense of what they think they know about what’s happening on the front line. So, they fail to visit often enough which also impacts their ability to tell stories. Thanks for your comment. I hope we see a lot more of you around here in the upcoming weeks and months!

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