Top 5 Mistakes Nonprofits Make (And How to Avoid Them)

It’s a busy time to be a nonprofit. There’s escalating need everywhere, grant availability fluctuates with politics, and everything from paperclips to plane tickets seems to just get more expensive. On top of all that, you’ve got to find a way to get and keep donors and raise much-needed funds. 

While I can’t guarantee my advice will skyrocket your nonprofit to the top of the fundraising charts, I can look at the past few decades we’ve spent helping nonprofits and point out some errors I see pretty often. Avoiding these common pitfalls will surely put you on a straighter path to success.

This article will cover the top five mistakes we see our nonprofit clients make. We will also offer advice on avoiding them and pivoting quickly if you realize you’re already entering the red zone.

Without further adieu, here we go….

Mistake #1: Not Investing in a Strategic Plan.

The fundraising life is often a whirlwind of activity, and executive directors can find themselves building the plane as they’re flying it. We cannot stress this step too much: Slow down, sit down, and invest time and resources in creating a plan.

This strategic plan should be the north star of your nonprofit. While it must remain a living, breathing, evolving document to stay relevant, the core mission won’t change, and your plan will be a great way to ensure your efforts are always aligned with reaching your goals.

A strategic plan offers the opportunity to lay out what you want to do and how you will do it. Your audience is broad: it’s your donors, your staff, your board of directors, your supporters. It’s a critical document if you plan to apply for grants. It lends validity and heft to your organization and clearly defines your reason for being.

What should you include? At its most basic, these are the elements of a nonprofit strategic plan:

1. An executive summary states your mission and details your goals. The goal can be lofty—end hunger!—but you’ll need to give an overview of how you’ll accomplish it. It succinctly summarizes the rest of the document.
2. Offer an overview of your organization. What is your background? Talk about your resources, including staff. What motivates them, and what unique skills do they bring to the table? Use this paragraph to discuss your qualifications and why you and your team can manage this organization and bear the fiducial responsibility.
3. Provide an analysis of the problem you want to solve. Quantify and qualify the need. How many are you trying to help? What challenges are you going to alleviate? 
4. Talk about your operational strategy. List the steps you’ll take to accomplish the goals you’ve stated. 
5. Discuss how you will market and promote your mission. Which outreach tools will you use? See what your technology is capable of and start there….direct mail, email automation, events, P2P. How will you measure success? What will you do if an effort underperforms? List your marketing activities and the expected outcome, with measurable metrics defining success.
6. Include financials covering your balance sheet, projected income, expenses, and where you plan to be in one, three, and five years.
7. End with an appendix of foundational documents. Your mission statement, logo and brand guidelines, anything of importance that communicates or defines your organization can be included.

If you’re stretched thin, some consultants can help you formulate your strategic plan. If you spend the time creating a solid document, you can rest assured that your time and resources are well and efficiently spent and that you are staying on track to meet your goals.

Mistake #2: Not Separating Your Role from the Board’s.

A nonprofit board of directors is a beautiful thing. They are invested in your mission and provide strategic guidance and support. But if there aren’t clear lines of responsibility and influence between the board and the CEO/Executive Director (ED), you can find yourself in a difficult situation.

Board members might not be board veterans, so it’s an error to assume they’re all-knowing and all-powerful and don’t need your input. 

The Board is responsible for:

• Hiring and setting the compensation of the CEO or ED
• Communicating to the staff of the organization through the CEO/ED
• Offering long-range planning and vision to the nonprofit
• Providing financial oversight and checks and balances
• Advocate for the nonprofit
• Providing feedback and guidance to the CEO/ED
• Fundraising and/or providing a financial commitment

We like how the National Council of Nonprofits says that the board should be considered “up in the crow’s nest, scanning the horizon for signs of storms or rainbows to explore (perhaps with a pot of gold at the end!)." Scan, but don't take a flying leap into the water!

You, as CEO or Executive Director, are responsible for:

• Working with the board to achieve your nonprofit’s vision
• Running the day-to-day operations of the nonprofit
• Managing the staff and serving as a liaison between the team and the board
• Developing and maintaining the culture
• Monitoring all data and responding appropriately
• Reporting on revenue

These lists aren’t exhaustive, but they give you an idea of where the lines can be drawn. If the board makes decisions about your staff or whether you should launch an email campaign, they are in the weeds and might become an impediment.

It’s worth your time to sit down with your board and detail the responsibilities of each. This documentation should be shared internally, so all staff members understand the relationship between the nonprofit and its board. Transparency will help keep those lines in place.

Mistake #3: Mission Creep.

If you don’t make mistake #1 and have a solid strategic plan, this won’t happen. If you have a plan and a vision, you’ll be less likely to fall into a pattern of following money and grants and reshaping your mission to qualify for funding.

For example, it’s easy to see an appealing grant that you’d qualify for if only you included a particular group of beneficiaries. That’s a dangerous place to be because, over time, you can quickly erode your original mission (which is the one you have data and research to validate). You weaken your nonprofit when your mission wobbles.

How to avoid this downfall?

• See mistake #1 and don’t make it.
• Refer to your mission statement every time you make a key decision.
• Have checks and balances in your decision-making process.
• Remember who or what you exist to help. Don’t waver!
• Periodically, talk with your staff and look for signs of mission creep so you can redirect your efforts.

As I often say, if you’re a nonprofit focused on gardening, even the most lucrative grant isn’t worth it if it means you’ll be running a youth basketball camp!

Mistake #4: Budget Cuts.

Hold on, we know. Sometimes tough times call for tough measures, and you have to trim the fat. But nonprofits don’t usually have much fat, and sometimes it seems impossible to recession-proof your nonprofit without cutting everything down to the bare minimum.

But in our experience, it makes sense to have a financial plan (again, avoid mistake #1) and follow it. But what, you ask, if my sustainers fall short of my expectations and I know I won’t have the revenue I expected?

Our advice is to double down on growing your programs and supporters before considering cutting costs. This is where good technology comes into play: if you can easily launch no-cost campaigns from your CRM, do it. A/B test your messages with small groups and find what compels donors or prospective donors to action, then try email or a peer-to-peer campaign. 

Sit down with your board and brainstorm ways to get more donors and more money from the donors you already have.

• Can you add a button to your website asking them to round up? 
• Can you leverage matching gifts technology to find some free money? 
• Is there an experience or lunch-and-learn you can sell? 
• Can you establish a “VIP” level of donorship that offers some perks—research, dinner with the Executive Director, or a tour of your facility?

The bottom line is that cutting costs is, of course, sometimes necessary. But don’t start there. Focus on outgrowing the problem first; raising more money, engaging more new donors, getting more support from existing donors. This strategy can save you in the short term and set you up for long-term success.

Mistake #5: Taking Donors for Granted.

Before you say, “Oh, we would never do that!” ask yourself the last time you conscientiously thanked your donors. Picked up the phone and called a donor to tell them how their donation impacts your mission. Sent a handwritten note of appreciation.

Take a good look at your casual supporters. You know, that one $25 end-of-year donation, or the plus-one of a donor that comes to a few events and sits on the sidelines. Those casual supporters are gold ready to be mined. They know about your nonprofit, and they’ve shown they will support you. How can you incentivize them to become regular donors?

Angel Aloma, who spent decades in charge of Food For The Poor, boils donor care down in this captivating interview.

We recommend a few tips to make sure your donors are feeling the love:

• Use data. Collect data in your CRM—yes, donation frequency and amounts, but also notes. Is someone having surgery? Donating on the anniversary of an event? Were they personally impacted by whatever you are trying to change? This information can allow you to build a relationship and create loyalty.
• Thank them. Often, loudly, publicly, genuinely. Use social media to give shout-outs to donors. Have donor appreciation days in which every staff member takes part of a list and calls to thank supporters.
• Make it easy to give. Start with the donation page on your website and ensure it’s streamlined, has suggested donation amounts, and has a clear path to donation. As your CRM adds different ways donors can pay, communicate the updates to them. 
• Consider a 30-minute donor focus group so you can get feedback. Approach just a few donors and see if they’ll meet with you via Zoom, then spend about 28 of those minutes just listening and taking notes.
• Don’t make it all about money. Particularly as times become turbulent, someone might not be able to donate but might love the opportunity to volunteer at an event, circulate a petition, or participate in a P2P campaign. What about in-kind donations? There’s more to support than writing a check and communicating that understanding will help all your donors feel seen.

Internally, we talk about how appeals must contain ethos, logos, and pathos, or Aristotle’s modes of persuasion. They can serve as a guide when we talk about donor care:

• Ethos: establish your credibility by talking about your success. If you don’t have a track record you can lean on, talk about the need and how you plan to meet it.
• Logos: What is the logical reason you exist? Use facts to validate the need.
• Pathos: Deliver an appeal that will trigger an emotional response. Who are you helping? Why do they need it? How will lives or circumstances be changed for the better with a donation?

Remember that your donors fuel your nonprofit. Donor care must be on the to-do list of your staff every day.

A Healthy Nonprofit

Avoiding these five common mistakes doesn’t mean the path will always be easy. But like the proverbial note on the fridge, keeping these top of mind will keep you safe from the pitfalls that catch many nonprofits by surprise.

And when all else fails, revert to common sense. Be organized and have a plan. Know your internal roles. Stay close to your mission and raise money rather than cutting funds. And always, always thank and love your donors. 

We talked about how technology can help you avoid all of these mistakes. Evaluate your CRM to see if it’s a good match for your efforts and goals. If it’s not, give us a shout, and we’ll show you ours.