The nonprofit institution needs a fund-development strategy. The source of its money is probably the greatest single difference between the nonprofit sector and business and government. A business raises money by selling to its customers; the government taxes. The nonprofit institution has to raise money from donors. It raises money, or at least a large portion of it—from people who want to participate in the cause but who are not beneficiaries.

A nonprofit institution that becomes a prisoner of money-raising is in serious trouble and in a serious identity crisis. The purpose of a strategy for raising money is precisely to enable the nonprofit institution to carry out its mission without subordinating that mission to fund-raising. This is why nonprofit people have now changed the term they use from “fund raising” to “fund development.” Fund development is creating a constituency that supports the organization because it deserves it. It means developing a membership that participates through giving.

ACTION POINT: A nonprofit institution that becomes a prisoner of money-raising has a serious identity crisis. Have you seen examples of this in your associations with nonprofits?

Managing the Non-Profit Organization