David Servant Talks About Fundraising

I don’t think that “fundraising” is a dirty word. Rather, fundraising is biblical. You can find examples of it in both Old and New Testaments.

Paul, for example, was quite a fundraiser. He devoted two chapters of his second letter to the Corinthians to communicate the needs of poor saints in an attempt to persuade his readers to give sacrificially to meet those needs. That is fundraising. When people sometimes tell me that I shouldn’t communicate needs or attempt to motivate people to meet those needs—but instead just pray about them—I point them to 2 Corinthians 8-9.

Fundraising involves telling a story (one that should be true, of course). People don’t give to causes about which they know nothing. So good fundraisers work at communicating their stories in an honest, compelling way.

Some stories are epic, and so they spread virally, needing little push from fundraisers. A prime example would be the ministry of Jesus. When the lame are walking and the blind are seeing, there is no need to send out newsletters asking for ministry support. The marketing was built into the miracles. And Jesus’ ministry was supported, at least in part, from the private donations of women whom He healed (Luke 8:1-3). Jesus also used donations He received to help the poor (John 13:29).

All of this is to say that honest fundraisers have no reason to be ashamed.

Fundraising Isn’t Always Easy

All international relief agencies know that when the devastation of an earthquake is widely broadcast through the media, fundraising suddenly becomes much easier. And the reason is because the story is being told to millions of people, and a percentage of them will want to make some sacrifice to provide relief. Capitalizing on this free advertising, well-known relief organizations enjoy financial windfalls that require relatively little investment on their part.

Most stories, however, aren’t so epic. So we fundraisers work hard to find people who will listen to our little stories. We know that if we can communicate with excellence through our words, photos and videos, people will respond, and we will be able to help those whom we desire to serve.

The Cost of Fundraising

All fundraisers wish that money would fall from heaven just by praying! But it doesn’t work that way. Fundraising requires work. And once funds are raised, more work is required to administrate what donors have given in order to serve the target beneficiaries.

There is always a cost to both fundraising and administration of funds raised. Consider even Paul’s fundraising appeal for the poor saints in Jerusalem, found in 2 Corinthians 8-9, and the subsequent administration of the funds he raised. Paul had to write the letter, which took time. It was part of what he did in a day full of ministry, ministry for which he was financially supported by churches he’d planted. So even the writing of 2 Corinthians 8-9 cost a little bit of money. Paul may well have used the services of a scribe, which may have also cost money.

Paul had to have his letter transported from Philippi or Thessalonica, from where he wrote it, to Corinth, a distance of 350 to 450 miles, journeys that would have required many days of travel. It could not have been done for free.

The funds had to be collected, not only from the Corinthian church, but other churches as well. That could not have been done without some expense.

And finally, the large sum of collected funds had to be safely transported to Jerusalem, something that also could not have been done without expense, and then distributed conscientiously to the Jerusalem saints in need, a task that would have involved the time of numerous people. Even if they were all volunteers, there were still the basic costs which the volunteers paid themselves. Again, there is always a cost to both fundraising and administration of funds raised.

How Much to Spend on Fundraising

So Nonprofit leaders have to wrestle with what percentage of their income should be used for fundraising and administration, just like business leaders have to think about how to allocate their company’s resources. But because donors are generally convinced that the best nonprofits are those that spend the least on fundraising and administration, nonprofit leaders are inclined to budget as little as possible for them. The end result is that they are often less effective at serving their target beneficiaries.

All nonprofits and charities incur inevitable expenses for fundraising and administration. That was true when Paul raised funds for poor saints in Jerusalem, and it has been true every time funds have been raised ever since. Even in the case of an all-volunteer organization, there are still expenses incurred for fundraising and administration, expenses that are often paid by the volunteers themselves.

So let us admit it: It costs money to inform potential donors of needs, and it costs money to use donated funds properly in order to meet the needs for which they were given.

And just as business leaders must decide what percentage of their budgets to allocate for advertising, so nonprofit leaders must decide what percentage of their budgets to allocate for fundraising. The same is true for administrative expenses. And the reason that many nonprofits fail or underperform is the same reason that many businesses fail or underperform: poor allocation of funds.

The Risk of Fundraising

Fundraising is like planting seeds of corn. There is an element of risk. When you plant corn seeds, you are burying something that you could have eaten instead. If it doesn’t rain, you’ll regret planting those seeds and wish you’d used them to make cornbread! But if things go as you hope after planting, you’ll end up with a whole lot more corn than if you had “played it safe.” In fact, one harvest insures that you’ll have a chance at another harvest, while the farmer who eats all his seed is a farmer for only one year.

I’ve watched quite a few fine missionaries come off the field permanently because of failure to understand this. They invested 99% of their money and time on their target beneficiaries, and 1% on the people who made their ministry possible through their donations. They made very little effort to communicate to their donors what their donations were accomplishing on the field, often with the excuse of “not wanting to waste time and money.” Consequently, their donors didn’t feel like they were an important part of the missionary’s ministry when, in fact, they were its lifeblood!

So those donors stopped giving, and before long, the missionary returned home, and often bitter that “no one wants to give to missions.” (Meanwhile, Christians give hundreds of millions of dollars annually to support Christian missions.) The real problem is that missionary violated the Golden Rule. He didn’t treat his donors like he would want to be treated if their roles were reversed.

The Necessity of Fundraising

General Motors spends about 3% of its total revenue on advertising. So when you buy a $30,000 car, you paid $900 to be persuaded to buy it.

You can be sure that General Motors has spent a lot of money to arrive at the perfect percentage of its revenue to invest in advertising in order to realize the highest profits. If GM’s president suggested that the company save money by eliminating all advertising, he would soon be looking for a new job.

The average percent of revenue spent by publicly-traded companies for marketing is about 10%, a cost that is passed on to consumers. So it is safe to say that about 10% of what you spend on purchases is what you pay to be persuaded to make those purchases. But you shouldn’t be upset about that. If those companies had not advertised their goods and services, you probably would not have known about them, and therefore would not have enjoyed the benefit of the goods and services that you purchased. (Yes, I know that advertisers often persuade people to purchase what they really don’t need or really can’t afford, but that is another subject…)