Fundraising, Strategic planning, Lead generation

Breaking Free of Scarcity Mindset: Strategies for Growth in a Challenging Fundraising Economy

Trista Murphy

Senior Vice President

As a nonprofit fundraising leader in 2024, you’re likely all too familiar with the challenges of navigating the impact of an uncertain economic landscape while trying to meet goals and drive growth for your program. Recently, the scarcity mindset is more prevalent among nonprofit leadership than it’s been in years. What does it mean, what does it look like, and how can you break free of the scarcity mindset to continue to do the amazing work that drives growth for your program?

What is a scarcity mindset?

In a difficult fundraising year, everyone from your donors to your board might be expecting you to do more with less – from organizational budget cuts to breakdowns in programmatic versus fundraising expenses. Scarcity mindset is the directive to cut back on costs, limiting fundraising budgets, without a complete understanding that fundraising costs have been continually on the rise and donors have been harder to obtain.

I get it. I feel it deeply because I’ve been there. But I can tell you most every success I’ve achieved came from being bold when others were reserved, investing as others pulled back, telling the stories that overcome difficult environments.

If you relate to this at all, I’m here to talk about it. Success in nonprofit fundraising often feels like swerving away from the pack, and it isn’t easy, but done with real intention, it works.

So what does this challenge look like in action within your program?

The impacts of scarcity mindset on nonprofit fundraising

To compound the pressure of limited budgets, many nonprofits are growing even more concerned by decreases they’re seeing in active donor numbers. In difficult times, the first place fundraising programs are often tasked with cutting is their acquisition efforts. Acquisition programs are often not only the most expensive, but they can also have long-tail ROI.

The trouble is, while this approach can put programs in the green for the first few cycles, good retention can never outpace donor acquisition. From our expert strategists to the nonprofit leaders on our Advisory Board, our No. 1 piece of advice right now is consistent: As much as possible, avoid slashing investment in acquisition, because it can negatively impact your program when looking at long-term results (anyone else remember having this conversation before?).

For the nonprofit fundraising programs I’ve run in the past, the key to identifying the issues that arise from cutting acquisition programs was in the data – looking closely at past results to inform the strategic choices we make when faced with similar challenges.

Making the case for your acquisition budget

So how do we combat the temptation (or the directive) to resolve budget limitations by cutting acquisition?

Instead, I want to encourage you to look to your data to let it tell the story. Has your organization had to cut acquisition programs before? What did that “cliff” look like, and how long did it take for your program to recover?

To face these challenges strategically, nonprofits are going to need to try new things, to be innovative and embrace a culture of learning in the face of a culture of certainty. We’ll need to consider how to make those new things palatable to your organization and your board, getting creative to test varying approaches and find alternatives that will give your team innovative insights without making your organization and your board feel resistant to the potential risk.

A balanced budget is worth the hard conversations

Protecting your acquisition budget, or any high-cost, long-payback vertical, from being the first thing to go amid budget cuts might call for hard conversations with boards and leadership. Rather than taking a blunt approach, can you work to find a more precise approach within the confines of a limited budget to bring a thoughtful fundraising program forward?

Think about measured changes across your program instead:
→ Adjusting your renewal volume and cadence
→ Getting dogged about your segmentation – every last one should perform
→ Seeking out and testing lower-cost acquisition sources that pay back faster

With balanced alterations across your budget, and by finding those thoughtful cost-saving approaches, you have the power to help your organization break free from the scarcity mindset, even in the face of a difficult fundraising environment, and do some incredible and innovative things for your mission.

If you want to talk more about the strategies you can put in place for your nonprofit, I’d love to hear from you – you can reach me at [email protected]. From big-picture strategic planning to talking more about The Digital Co-Op’s low-cost list growth solutions (and strong ROI), I’m always excited to get the conversation started about driving long-term growth for your mission.

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