Avoiding the “Single Donor Trap”: Sustainable Fundraising for Nonprofits

Imagine building your nonprofit’s vital work, on the foundation of only a few key donors. This is a reality for many nonprofits, especially startups and small organizations, and can be “oh so tempting” especially when a big giver catches your vision early in your fundraising journey and “wants to help”. This single donor trap can lead to significant funding gaps when those sources shift their priorities.

Let’s look at 2 case studies from organizations we’ve helped to understand how you can avoid these pitfalls, and create a more resilient fundraising strategy.

Case Study 1: "Getting Started Faster" - The Peril of Over-Reliance

One mission-driven nonprofit quickly launched its services thanks to a single foundation's generous support (about 90% of the nonprofit’s overall budget!). However, after 10 years when the foundation's focus changed, the nonprofit was left scrambling to rebuild its fundraising from scratch.

• Key Takeaway: While a large initial donation is tempting, prioritize diversifying your funding from the outset. Build a broad base of support to ensure long-term sustainability. In the beginning days of your nonprofit journey, 80% of your time should be focused on building your donor support base.

Case Study 2: "The Easy Plan B" - Cultivating Deeper Donor Relationships

Another organization we’ve worked with benefited from a high-capacity donor with a "just tell me what you need" approach. While that is quite generous, this quickly led to over-reliance and hindered their efforts to cultivate other donors. The generous giver became an “easy plan B” for the nonprofit, instead of doing the hard work of cultivating lots of donors to support the initiative.

• Key Takeaway: When a major donor offers significant support, delve into their motivations and expectations. Establish clear internal guidelines to honor their generosity while still actively pursuing diverse funding sources. Focus on building all the meaningful donor relationships you can.

What To Do Next:

Don’t fall into the “single donor trap” and allow your nonprofit’s future to depend on just one (or even a few) sources… as tempting as that might be. Rather, take the proactive steps today to grow your donor support base as wide as possible, with many givers. This puts your nonprofit on a strong, sustainable foundation, and ensures that your organization is positioned to make LASTING impact for years to come.

Need help with growing your donor team beyond your friends and family? Most people hate fundraising because they don’t have a plan, and they lack the confidence to ask for help with boldness. Our FREE Mini Course changes all that… unlock the course NOW, and in a few short steps, you can be on the road to asking others to join with you financially in a way that will grow your support base at least 5X!