Imagine you knew a psychic whose readings were known to be completely accurate. People sought her out from miles around. You approached her and said, “What is the best way for our nonprofit to raise money?”

She looked into her crystal ball and said, “Actually, I am seeing that you could get money any way you want to. Foundations will help you. Corporations will help you. Poor people and rich people will line up to donate. Government grants can be yours. Whatever you turn your hand to will be profitable.”

How would your organization decide to raise money in this fantasy? You would probably think about what kind of fundraising would be the most in keeping with your mission, and you would likely ponder what kind of fundraising would be the easiest to manage. Weighing these two questions, you would quickly realize that the answers do not always point to the same kinds of fundraising for each of them. Take an overly simple example: having ten individual donors who give very large gifts would be easier to manage than having 1,000 donors. But if one of those donors said she wanted you to do X or did not like that you were doing Y, and her donation rested on your organization changing focus, suddenly the easy management (just say yes and keep getting the money) would run up against your mission.

Not asking what kind of funding streams are most mission fulfilling is the root of many of our social problems. For example, public schools used to be almost entirely funded by . . . wait for it . . . the public, through taxes! Now most public schools are really public/private partnerships, with public funding taking care of bare bones needs and a bevy of parents and friends raising money to pay for art programs, music education, libraries, sports uniforms and supplies, and the like. Charter schools represent an extraordinary collection of hybrids: they use both public and private funding and are run by for-profits and nonprofits. There may be advantages to this arrangement. For example, because they are involved in raising funds for the school, the parents have a lot of skin in the game, and perhaps for that reason the children don’t take any aspect of their education for granted. But even the existence of these hybrids points to the fact that we, as a nation, never had a conversation about how public schools should be paid for. In the 1980s and later, because of the Great Recession, communities saw their tax revenues fall and the quality of their schools go down, so they rallied to raise money. Some communities did rally in favor of higher taxes, to be sure, but mostly the burden of ensuring a good education for their children has fallen more and more on beleaguered parents. Parents who have one job and some energy left at the end of the day can, through their PTAs and PTOs, raise money. Parents holding down more than one job or having other complications and time constraints cannot, to the disadvantage of their communities’ public schools.

We are a reactive nation, and this serves us well when reacting generously is most helpful. We respond to natural disasters quickly. At local levels, people often rally to the needs of someone who can’t afford surgery or a family made homeless by a fire. But we don’t think nearly enough about structural change, that is, how can nonprofits address the root causes of social problems, instead of continually reacting to them, and this failure to be able to look at the bigger picture is causing us a lot of problems.

If we were to graph the growth of the nonprofit sector since 1975, we would see about a 500 percent increase in the number of nonprofits. In the 1970s, there were about 300,000 nonprofits in the United States and by 2005, there were 1.5 million. If we were to superimpose another graph showing indicators like child poverty, high school dropout rates, drug addiction, homicide, infant mortality, environmental destruction, hate crimes, or any number of other social problems, we might expect a concomitant drop in those numbers against the rise in the number of organizations designed to address these pressing social issues. Instead, for the most part we see a growth in major social problems right alongside the growth of the sector. Certainly, I think few people would say that the nonprofit sector is at fault for that, and most of us would say that the problems might have become a lot worse if it weren’t for our efforts, but we do have to ask why we haven’t made more inroads when we now represent, as pointed out in Chapter One, 10 percent of the workforce and, were we a single industry, we would be one of the nation’s largest.

Although a full analysis of this question is well beyond the scope of this book, I do believe the failure of nonprofits to lead conversations about the role of private and public funding is related to our failure to make significant progress in addressing some of our most intractable issues, such as poverty and racism.

The rise in the number and size of private foundations and donor-advised funds is a direct result of the wealth created for the top 5 percent of Americans by poor tax policy. Fortunately, some of these very wealthy people want to give some of their money away, and I applaud them for that. Why is this important in fundraising for social change? Because in the past fifteen years there has been a large increase in the number of foundations making significant grants to social justice organizations, and many social justice organizations are 70, 80, even 90 percent supported by foundation grants. Consequently, the executive director spends most of her or his time pleasing funders, attending funder convenings, and sharing information with other social justice organizations about foundations, program officers, and trends in funding. The fact that foundation funding does not build power among a large constituency, nor is it reliable over the long haul, nor often does it even reflect what the organization would most like to be doing, may be considered the price you pay for financial stability, although that will only be true in the short term, and financial stability should not be the driver of your fundraising.

I meet many organizations that want to raise money from individuals because their foundation funding has dried up, or because they lost their government funding. Individual donors are a fall-back position. I have had people say, “We have to individual donor stuff because we have no other choice.” Needless to say, this is not a good reason. If you are going to raise money from individuals, you have to think that is the best route for your organization because individual donor fundraising is, in many ways, the hardest. It requires finding a lot of people not just to give money, but also to raise money. It is detail-driven and success requires using a variety of strategies.

Viable organizations start with a philosophy of funding. You can have this conversation any time, but having it when you are first starting out is most helpful.

Many organizations cannot be funded in an ideal way. Many public health issues are taken care of privately, and often foundations provide an amount of money that is unrealistic to think of raising from low-income individuals, particularly for organizations that are just starting out. But you need to know what direction you are moving in and to raise consciousness among your board, staff, and volunteers about why you are raising money the way you are, and what might be better alternatives.