In recent years, the nonprofit fundraising environment has evolved at an unprecedented pace. The pandemic had a seismic impact on many nonprofits, particularly those in the arts and culture space that were forced into months-long closures. Many organizations saw earned revenues dry up overnight, leading to widespread concern.
Government stimulus programs including the Paycheck Protection Program (PPP), Employee Retention Credits (ERC), and Shuttered Venue Operators Grants, paired with donor support, provided nonprofits with some relief. However, for many nonprofits, the pandemic served as a reminder of the importance of securing their organizations’ long-term financial stability.
Achieving that financial stability demands nonprofit leaders navigate a fundraising environment that’s markedly different from that of even just a few years ago. Building a thriving development team that attracts significant donor contributions has never been easy, but today, it’s perhaps more difficult than ever.
In this overview, we outline several of the most notable changes that have occurred in nonprofit fundraising and explore the best practices arts and cultural institution leaders should consider as they redefine their development strategy for lasting success.
The pandemic threw the importance of long-term financial stability into sharp focus for many nonprofit organizations, particularly arts and culture nonprofits. No organization was unscarred; even iconic institutions with large endowments faced significant challenges.
In an operational sense, many arts and culture nonprofits have struggled to rebound fully from the lingering effects of the pandemic. While contributions have bounced back, attendances at organizations like symphonies, orchestras, and ballets generally remain lower than 2019 levels. For these organizations, donor revenue is critical.
However, there are challenging headwinds for leaders to navigate. While dollar contributions to the nonprofit sector rose by 4.7% in Q3 of 2022, the number of donors decreased by 7.1%. In 2021, the average donor age was 65, up from 62 in 2016.
The data shows the donor pool is both shrinking and aging. For nonprofits to continue to be successful long-term, they must build bold fundraising strategies that create enduring relationships with key supporters.
Running a successful development team in today’s environment demands that nonprofit leaders take a different tact from the past, embracing innovation and broadening their organization’s appeal to donors. This is an important area for nonprofits to allocate resources toward: upskilling development teams is an investment that will reap significant rewards in the long run.
Below is an overview of several steps arts and culture organizations should consider taking to improve the efficacy of their fundraising campaigns.
Digital fundraising platforms are becoming central to the way that donors interact with nonprofits. Nonprofits must invest in building exceptional digital experiences that help their organization effectively tell its story through a variety of digital mediums.
Focus on creating an intuitive, easy-to-use platform that streamlines the donation process and captures the information required to nurture lasting donor relationships.
Donor retention is a key success metric for development teams, measuring the percentage of donors who make recurring contributions to an organization. Building these ongoing relationships takes a concerted effort from the development team.
Besides compliance requirements such as acknowledging donor contributions, development teams should also be focused on effectively communicating the nonprofit’s story and highlighting the impact of the nonprofit’s programs.
Incredible fundraisers are out there but remain difficult to find. Instead, many organizations are outsourcing elements of their fundraising efforts, working with proven specialists to foster stronger relationships with donors that encourage ongoing support.
Donors have always skewed towards an older age bracket, but recent years have seen this trend become more pronounced. Regardless, it’s important for nonprofits to bridge generational gaps and cultivate a diverse group of donors.
One opportunity is to focus on nurturing young leaders. Consider establishing an advisory committee of young professionals. Over time, as these professionals progress in their careers, they may develop into potential donors and board members that can lead your organization to a brighter future.
Many organizations are deprioritizing capital campaigns in favor of comprehensive campaigns that help ensure the nonprofit’s long-term financial sustainability.
These campaigns are extremely valuable in helping nonprofit organizations to build operating reserves and invest in technology that acts as a foundation for future growth. Comprehensive campaigns also allow nonprofit organizations to build closer relationships with smaller donors, although it’s important to ensure coordination between comprehensive campaigns and capital campaigns.
Boards play a vital role in the fundraising process of many nonprofits – particularly at smaller organizations. An engaged, active board is an invaluable fundraising resource.
Highly effective nonprofit board members will be well-known in their communities, acting as an extension of the development team and taking on ambitious individual board member fundraising goals. Appointing new board members with vibrant networks can dramatically accelerate a nonprofit’s progress toward its fundraising goals.
The nonprofit sector has evolved significantly in recent years and today, the fundraising environment remains in flux. For many nonprofit organizations in the arts and culture space, cultivating donor relationships is vital to ensuring the lasting success of the organization.
The strategies that define effective fundraising today are different from those of even just a few years ago. Development teams and nonprofit leaders must be able to retain relationships with existing donors while building new connections with the next generation. Much of this boils down to the effective use of modern fundraising strategies, including digital campaigns and donor relationship management platforms.
At Smith + Howard, we’re proud to have over five decades of experience advising arts and cultural institutions across the nation. Our nonprofit accounting and advisory professionals provide a range of services that support effective fundraising, including preparing Form 990, financial statements, and campaign collateral. With a well-regarded assurance team and experienced advisory professionals, Smith + Howard is equipped to help nonprofits build the financial foundation they need to have a lasting impact on their communities.
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