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There are risks to know about the process

Fundraising is such an integral part of nonprofit work that nonprofit managers often forget to heed warnings about the pitfalls. Yes, it’s necessary, but yes, there is a common-sense approach to this vital activity.

Erin Gloeckner, a former project manager at the Nonprofit Risk Management Center, said that there are three main ways in which nonprofits fail in terms of risk management. They are:

  • Failure to anticipate donor trends. This falls into two main areas: Recognizing the changing donor engagement model and getting to know an organization’s donors. The first means keeping donors in the loop with constant communication, and the second means understanding what stakeholders expect from the organization.
  • Falling prey to viral fundraising pitfalls. To avoid this: respond to donors’ negative comments, and engage donors with entertainment. Donors don’t have to hack into the system to exert control over viral fundraising. A bad-mouthing Twitter campaign can spell ruin, and failing to respond allows rumors and accusations to grow. Donors are willing to have fun, even when it comes with fundraising.
  • Improper use of restricted gifts. This needs two protections: establish a gift acceptance policy and only accept gifts that principally benefit the nonprofit. Formalize policies, and beware the gifts that support the donor more than the nonprofit.

As we celebrate our 36th year, NPT remains dedicated to supplying breaking news, in-depth reporting, and special issue coverage to help nonprofit executives run their organizations more effectively.