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5 Tips for Overcoming Nonprofit Sector Challenges This Year

Janet Martin July 11, 2023

Fundraising Automation
These days, nonprofits face a multitude of challenges. From rising inflation, to employee turnover, to donor lapse, these roadblocks can overwhelm your organization and halt its growth.

Luckily, there are ways that your nonprofit can combat these challenges and continue to thrive. This guide will offer strategies for overcoming obstacles to maintain stability in your organization and grow your fundraising efforts. These tips include:

  1. Maintain a strong focus on donor retention. 
  2. Invest in employee engagement and professional development. 
  3. Diversify your funding sources.
  4. Incorporate new technology, but don’t lose the human touch. 
  5. Work with a nonprofit consultant when necessary.

Equipped with these five tips, your organization will be ready to take on any challenges currently facing the nonprofit sector. Let’s dive into some strategies.

1. Maintain a strong focus on donor retention.

Low donor retention rates are a consistent challenge for nonprofits, but recent data shows last year was a particularly challenging time for nonprofit fundraising overall. In 2022, total giving fell 3.4%, only the fourth time in forty years that giving didn’t increase year over year. 

While the average nonprofit donor retention rate hovers around 45%, repeat donor retention rates are much higher, usually around 60%. This insight indicates how valuable consistent donors can be to your organization.

Besides the fact that repeat donors are more likely to continue supporting your organization, it’s also much easier to keep existing donors around than recruit new ones. By maintaining a high donor retention rate, your nonprofit can combat donor recruitment challenges and maintain a stable fundraising pipeline.

Keeping donors engaged will remind them why they continue to support your organization. Common methods for engaging donors include:

  • Segmenting donors to personalize communications. By implementing donor segmentation, you can connect with donors on a more personal level. Potential segmentation categories may include donation level, geographic location, interests, and preferences. For further personalization, you can address donors by name and reference their specific history with your organization.
    • Showing prompt and genuine appreciation. Make sure your donors know how much you appreciate their support. Sending a quick thank you letter or donor gift can strengthen your relationship with donors and show that you care about them.
  • Connecting donors’ gifts to real impact. When donors contribute to your organization, they likely want to know what their funds are going toward. By showing donors exactly what their donations helped your nonprofit accomplish, you can help them feel proud of the impact they’ve made.

Donors are essential to the success of your nonprofit. Engaging them will help you build stronger donor relationships and elicit their continued support.

2. Invest in employee engagement and professional development. 

Since 2020, the annual employee turnover rate for nonprofits has increased by 10%. While the COVID-19 pandemic may have decreased employee retention, it also highlighted how important it is to consistently engage your employees and support their growth.

In order to encourage employee retention, there are several practices you may consider putting in place. eCardWidget suggests employee engagement ideas such as hosting fun events, giving meaningful feedback, offering frequent incentives, and highlighting success. By making the work environment a welcoming and enjoyable place to be, your nonprofit can offer a stellar employee experience.

In addition to engaging employees, you’ll also want to show you’re invested in their professional development. People want to feel challenged in the workplace and learn new things that will strengthen their performance. Offering training opportunities such as dedicated training programs, stipends for outside courses, and access to conferences can equip employees with the tools they need to grow in your organization.

When you invest in your employees, both personally and professionally, you’re demonstrating that you care and creating an ideal working environment. If implemented successfully, this investment will lead to higher employee retention.

3. Diversify your funding sources.

Pursuing a variety of fundraising channels fosters sustainable growth, ensuring that you can maintain stability even if one funding source dries up. Potential funding sources include:

  • Digital fundraising. Taking fundraising online is perhaps one of the easiest and most efficient ways to fundraise. Think social media campaigns, emails, videos, ads, and more.
  • Corporate sponsorships. Team up with a company that will help you achieve your nonprofit’s mission. If possible, seek out an organization that’s local or has similar values to your own.
  • Grants. There are so many different grants out there specifically geared toward nonprofits. For example, the Google Ad Grant is an incredible option because it offers $10,000 per month in ad spending.
  • Major and planned gifts. Of course, traditional donations are a tried and true funding source. Encourage recurring major and planned donations by focusing on proper donor stewardship
  • Events. What better way to fundraise than by bringing people together in support of your cause? There are endless types of events you could host, including runs or walks, galas, auctions, and workshops.
  • Direct mail fundraising. A physical letter can give a personal touch to your fundraising efforts. Make sure to segment your supporters and address them by name.

There are so many different options when it comes to funding sources. Take advantage of multiple different types in order to switch up your fundraising efforts.

4. Incorporate new technology, but don’t lose the human touch. 

In a society that constantly focuses on the newest and brightest technology, it can be challenging for nonprofit professionals to keep up with the latest fundraising tools and best practices. However, it’s important to take the time to understand new fundraising methods and implement them effectively in your daily operations.

Innovative fundraising solutions like AI tools can help streamline the fundraising process by improving efficiency and reducing time-consuming manual tasks. Incorporating tools like automation solutions, chatbots, and predictive algorithms into your fundraising processes can help your organization stay ahead of the curve and fundraise more productively. 

While introducing efficiency can leave more time to focus on big-picture tasks, be wary that these tools don’t entirely replace the human touch.

There are plenty of ethical considerations when it comes to new fundraising tools, and they require careful oversight to keep donor and constituent data safe. Make sure you dedicate time and resources to protecting sensitive data.

Striking the perfect balance between staying up to date with current technology and including human oversight will put your nonprofit in the best position ahead of future fundraising campaigns and initiatives.

5. Work with a nonprofit consultant when necessary.

Sometimes, you might not have enough time or resources to dedicate to a certain project or department within your organization. In that case, there are plenty of different types of nonprofit consultants who would be happy to assist you.

Types of consultants you might consider working with include:

  • Fundraising or strategic planning consultant. There are so many different ways to fundraise. Working with a fundraising or strategic planning consultant can ensure that you use the right combination of fundraising methods for your organization.
    • Digital marketing consultant. Getting your nonprofit in front of potential stakeholders can be a lofty goal. Digital marketing consultants help nonprofits develop marketing plans and take advantage of nonprofit marketing resources. For example, Getting Attention’s guide to Google Ad Grants agencies explains that these experts assist organizations in optimizing their Google Ad strategies to reach more potential supporters online. 
  • Technology or CRM consultant. As mentioned, it can be difficult to keep up with and manage new technology. Working with a technology or CRM consultant can help your organization use technology and constituent data effectively.
  • Legal consultant. If your organization needs legal advice or assistance, look no further than a legal consultant. There are legal consultants out there who are specifically trained to work with nonprofits, so they’ll tailor their services to your needs.

To maximize your organization’s growth and development, take stock of your current initiatives every so often to identify opportunities where a nonprofit consultant could help.

Your nonprofit will inevitably face challenges from time to time, but there’s a variety of ways that you can overcome the problems at hand. By making sure your donors and employees feel appreciated, utilizing different funding sources, carefully incorporating new technology, and working with nonprofit consultants, your nonprofit can combat challenges and become more resilient as a result.

Is your nonprofit organization getting the most out of its technology? PairSoft’s natively integrated fundraising automation has helped thousands of organizations go above and beyond their goals. Get a demo today.

Headshot of Janet Martin

Janet Martin

Janet joined the PairSoft team upon its merger with Paramount Workplace, where she was also an integral part of the sales team for years. Janet resides in Michigan with her family.

View all posts by Janet Martin
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