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ASU Lodestar Center Blog

Why should charitable donors invest in nonprofit infrastructure?

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The nonprofit starvation cycle has haunted the nonprofit sector for years, but as the sector becomes more professionalized, it is now more important than ever for leaders in the sector to begin taking the steps necessary to overcome this vicious cycle. The unrealistic expectations that have been created through the nonprofit starvation cycle by donors only continues to rise as nonprofit efficiency is judged on financial ratios.

Nonprofit organizations love the idea of improving their infrastructure, and according to Stanford Innovation Review, organizations who invest the proper resources into infrastructure are more likely to produce efficient charitable outcomes in regard to their missions than those who don’t. If investing into nonprofit infrastructure will help advance organizations to that next level, then why do nonprofit leaders loathe the idea of putting any money into infrastructure? The answer is simple, the nonprofit starvation cycle and unrealistic donor expectations.

The first step nonprofit leaders can take in breaking this cycle is to begin working with donors on what investing in nonprofit infrastructure can do for their organization. Donors need to be educated on the harsh reality of solely judging an organization’s efficiency through financial ratios. The recommendations below are intended to help nonprofit leaders reflect on what they can do to overcome the starvation cycle through charitable donors.

Relationship development

“Relationship development is at the heart of the nonprofit sector,” Amelia Schafer, executive director of the Alzheimer’s Association, said. With nonprofits continually starving for the freedom to invest in nonprofit infrastructure, developing meaningful relationships is more important than ever to survive the nonprofit starvation cycle. Nonprofit leaders should begin working with their fundraising staff to strategically develop relationships with highly committed donors to educate them on the need to invest in nonprofit infrastructure. Donors who already have an attachment to a cause will care less about the actual fundraising solicitation and more about the needs of the organization.

One thing nonprofit leaders should be weary of when working on developing relationships with donors to invest in infrastructure is to not have one donor cover all infrastructure expenses, as mentioned in the American Review of Public Administration. Also noted in the review is that nonprofit solicitations that are completely overhead free only add fuel to the fire of the unrealistic expectations donors already have and instead, working with a few highly committed donors will better communicate the infrastructure needs of your organization.

Have a defined and strategic mission

Nonprofit organizations are constantly under pressure to continually expand their programs and services to enhance their efficiency, but rather, having a strong mission with a strategic plan will not only help enhance commitment among donors but will also make decision making within an organization much easier. When a nonprofit organization stays true to their mission, donors can see their dollars are being used to make a difference. When donors feel as though they are a part of something, they are more likely to understand what an organization needs to fulfill their mission. In return, a strong defined mission statement makes the decision-making process to invest in nonprofit infrastructure much easier if that investment will enhance the organization’s mission in the long run.

Take control of your reputation through social media

Developing a strong, trustworthy reputation is a crucial asset that nonprofits can possess, not only with donors but with the general public, a 2019 Effects of Nonprofit Reputation on Charitable Giving survey found. The survey noted that a strong reputation is something nonprofit organizations can be judged on that is outside of a financial ratio, and nonprofit leaders should consider building a strong marketing plan to enhance media visibility, which will lead to a better reputation and more charitable donations.

The rise of social media vehicles has made marketing more budget-friendly, assessable and successful. It has been shown through the 2019 survey that by investing time into developing a strong social media following, individuals will give more to your organization, and that a social media presence is especially important as a new generation of charitable donors emerge.

Succession planning education

Proper succession planning is essential to remain sustainable in the nonprofit sector, noted by the National Council of Nonprofits, and leaders should constantly be having the proper conversations with their board and high-stakes charitable donors to ensure that the organization will have the proper infrastructure to invest in talent when a transition occurs. The Council also advises that communication with donors regarding succession planning will allow nonprofit organizations to begin feeling the freedom to invest in competitive salary wages to attract top level talent that will allow for full mission optimization.

Be an advocate for change

“Nonprofits need to stop living in fear and start recognizing the work they do in their communities is valuable,” Cyndy Luzinski of Dementia Together said. Nonprofit leaders do deserve to be compensated for the meaningful work that they do. Conversations need to be happening with stakeholders on the importance of investing in infrastructure to remain sustainable. If nonprofit leaders continue to devalue staff and themselves due to fears of being judged, according to the Nonprofit Starvation Cycle, the sector cannot remain sustainable. As the nonprofit sector becomes more professionalized, leaders need to stand up for themselves, their staff and the sector when working with charitable donors to continue the notable work they do to advocate for a sector wide change.

These recommendations are some of the first steps nonprofit leaders can take in combating the nonprofit starvation cycle through working with charitable donors. By standing up against this cycle, nonprofit leaders can gain the confidence in the value their missions bring to their communities and work together to become advocates for change of the unfair and unreasonable stigma of the starvation cycle. Charitable donors should start investing in nonprofit infrastructure in order for the sector to remain sustainable for years to come.

Katie Peterson is a graduate of the Master of Nonprofit Leadership and Management program at Arizona State University. Katie is a full-time fundraiser for the Alzheimer’s Association: Colorado Chapter where she works on two Walk to End Alzheimer’s Events. During her time working in the nonprofit sector Katie has developed a passion for cultivating meaningful relationships with stakeholders. She lives in Northern Colorado with her soon-to-be-husband Brandon and their rescue dog Reggie. She enjoys skiing, cooking and spending time with her friends and family. 


ASU Lodestar Center Blog