Free Money is NOT Free

Someone recently told me: “I could really use all of the free money you can find for me.”

My answer to that: philanthropy & fundraising revenue is not free money.

It’s not!

If you get access to capital, no strings attached, no accountability, or impact or reporting needed… I’ll be the first to tell you to take that money.

But if you’re looking to get funds to operate your nonprofit, then it will cost you in return. 

On average, for every new donor, it costs $1.00 to $1.50 per dollar that you raise. Once you have set relationships and an established donor base, you may be able to get that to $0.20 per dollar raised.

This cost ads up… so free money is not free. It’s actually expensive.

How and why is it so expensive? 

First, you need to pay people to bring their expertise. You need to pay people to use this expertise to put systems in place, to build the infrastructure, communication strategies, and development/fundraising strategies. 

Next, you need to execute on the strategies. You need the time and revenue to pay for other people’s time and expertise while relationships are built, proposals are drafted, presented, reworked, presented again, and ultimately when a decision is made. Average major gift decisions take 18 to 24 months.

Monetary and giving decisions are not typically fast decisions – The Speed of Trust takes time.

And don’t forget to say Thank you!

Saying thank you is a vitally important part of fundraising and, again, it is not free. You also need expertise, strategies, and time to develop and execute. 

Your best donors are your past donors you’ve built a relationship with. Yes, there are cases of quick online, crowd sourced funding that get huge overnight. But for every example of 6-7 figures raised for one of these ‘success stories,’ you have exponentially more that have raised pennies when thousands or tens of thousands were needed.

Some of this success is timing (lucky or unlucky).

Some of it is messaging and branding.

Some of it is what is happening in the world around you so that the messaging resonates and hits in the right way, at the right time, in the right place, with the right people.

For this to be replicable – lightning struck once – amazing! Accept this success, say thank you and do with it what you promised you would do. 

To replicate and create your own lightning moment, it is an investment in time, energy, money, and expertise.

My point? Free Money is NOT Free.