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No Mission, No Money

My last post of 2021 was titled No Money, No Mission about my learning how fundraising is essential to being able to move an organization’s mission forward. So what better way to start 2022 than with a post on the converse statement: No Mission, No Money.

All 501(c)3 nonprofits have three things in common, 1) they are established with the purpose of serving the public good, 2) they have a mission stated on Part I, line 1 of their 990, and 3) that “no part of the organization’s net earnings can inure to the benefit of any private shareholder or individual.”

Many people understand that third item to mean that nonprofits shouldn’t, or can’t, make money. And many people believe that nonprofits shouldn’t have a surplus at the end of the year or have a reserve. That simply is not true. It just means that any surplus must be retained by the organization and used in furtherance of its mission.

Nonprofits should earn income through program fees, grants, and donations. This is an important part of what nonprofits must do in order to support their mission. And if they can accomplish set goals and still have some money left over at the end of the day that’s not just a good thing, it is a great thing!

The need in almost every area served by nonprofits is seemingly endless. Surplus funds are what allows an organization to not just meet its annual goals but to grow, so that it can do a better job of serving its mission in the future. Most organizations have a long list of things they could do better if they had more money.

About 80% of nonprofit revenue is earned from fees for service and government contracts. The remaining 20% comes from donations. Those donations are not only what allows organizations to close the gap between providing their services and what they earn from fees and government contracts, they are also frequently what provides the extra income for an organization to grow and do a better job of fulfilling its mission.

All fees, government contracts, and donations stem from having a mission.

It is critical for everyone involved in fundraising to understand that all nonprofit giving is motivated by supporting a mission. Whether it is a $1,000,000 donation for an expansion to a local homeless shelter, or a $25 memorial gift to a decedent’s favorite charity, or $125 to play in a golf tournament for a youth center, all of those donations are made in support of a mission.

Bottom line: donors give to the mission. Hence, no mission, no money.

To be effective fundraisers, organizations must have a clearly understandable mission that resonates with donors. And they must be true to that mission in everything they do.

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