4 Hard Truth About Finding New Donors and Practical Solutions to Overcome Them

One of the most frequently asked questions we receive is “how do we find new donors?” And it’s clear to us why we receive this question. Most nonprofit organizations rely on fundraising, and specifically donations from community members to support their mission.

While fundraising from individuals and corporations can be an excellent way to raise funds, there are certainly some hard truths that nonprofits should consider before asking the community for donations. 

Hard Truth #1: Donor Acquisition Can Be Costly. Donor acquisition simply refers to the process of identifying new donors to support your organization’s cause. Many organizations we encounter are eager to acquire new donors, but one thing to consider is that this process can be costly in terms of time, effort, and money. Finding new donors requires the time consuming process of prospect research which will help your nonprofit identify suitable potential donors who have an interest in your cause, and the discretionary income available to make a gift. There are paid resources to help with this search including databases and nonprofit consultants, but that usually requires a fairly significant financial investment.

The good news is that prospect research is only one strategy to find donors. Most organizations can implement strategies that will help them to retain their current donors. It is much less costly for organizations to retain their current donors than to acquire new ones. Therefore, a combination of both strategies can help organizations manage their time and support an effective fundraising strategy.

Hard Truth #2: Finding Donors Is Competitive. In Canada alone there are over 170,000 charities and nonprofits. And likely more are founded every year. Each of these organizations support a worthy and important cause. And, each of these organizations are competing for the same pool of funding as your organization. Each year on “Giving Tuesday,” you may receive several emails from various organizations seeking your support, and we are sure they are all credible. So what are organizations like yours to do in the face of all of this competition?

Most donors have preferences and interests that lead them to support specific causes. For example, one donor may have a loved one that suffered from a particular health concern. Or another donor may have a passion for supporting the arts, or education. These interests or donor affinities are helpful to nonprofit organizations like yours. To stand out from the crowd and attract donors to your cause, your nonprofit should develop very specific and compelling messaging about your organization and the good it brings to the community. Having strong messaging is key to building a strong case for support that can be used when trying to communicate with donors and persuade them to support your organization’s work.

Hard Truth #3: Big Nonprofits Have More Resources and Capacity. As we shared in the previous point, in a country with thousands of worthy causes all seeking donations, it is important for organizations to invest time and resources into their fundraising strategy. But a hard truth is, some organizations have significantly more resources than others. Large organizations may have an entire team of fundraisers, whereas a small, grassroots nonprofit may have just one staff person, or be entirely volunteer-run. So how do these organizations compete for funding?

Regardless of the size of your organization, there are donors that may be willing to support your cause. You simply have to identify them. It is important that your organization use some system to keep track of and manage your donor data. Documenting your connections will help your organization identify your supporters and connect you with potential donors in the future.

Hard Truth #4: Donors May Be Cautious. We live in a world where being cautious can certainly be a good thing. Personally, when we go to the store and the cashier asks for a postal code, we always decline. We’re just picking up a few items, why would we share our personal information? In addition, the prevalence of scammers seeking donations for fake charities, or organizations they are not associated with at all have become newsworthy and unfortunately damaged public trust. 

But, your organization has the potential to overcome this lack of trust, by being transparent and building relationships with donors. Be transparent about why your organization needs the money and how it will be used. Invite current and prospective donors to see your work in action. Share information about your work on social media. The more you do to build relationships with potential donors, the more likely they are to trust your organization’s authenticity and support you with a gift.

Struggling to find donors without a strategy? Evaluate your effectiveness with our quick Finding Donors Assessment tailored specifically for small nonprofits.