Every nonprofit organization depends on successful fundraising. By raising funds, organizations may broaden their audience, raise awareness of their concerns, pay for overhead, and eventually carry out their objective of meeting new needs in their communities.

However, nonprofit organizations' attempts to meet their fundraising targets are being hampered by a number of issues. These issues vary from dwindling participation and inadequate communication tactics to increased competition for people's attention and donor weariness.

Nonprofits may take action to increase their chances of success, even if overcoming these obstacles may not be simple. Nonprofit organizations may expand their reach, enhance their pool of donors, and have a greater effect if they have the proper people, strategy, procedures, and technology in place. 

Read also: Common Mistakes In Startup Funding Pitches

6 Difficulties in Nonprofit Fundraising

Many nonprofits are seeing a drop in financing at a time when the economy is struggling and inflation is a problem. The average charity organization reported a 4% drop in revenue between 2021 and 2022, according a 2023 study of 215 charities. Additionally, many NGOs have a poor long-term outlook: The National Center for Charitable Statistics estimates that 30% of charitable organizations will fail within ten years.

Nonprofits have a wide range of fundraising difficulties, ranging from inadequate board participation and communication to donor weariness and low contributor retention. Nonetheless, nonprofits may reach a wide audience, cultivate enduring support, and strengthen their influence on communities with careful planning. To improve your organization's chances of fundraising success, learn about the many challenges that many charities encounter and how to overcome them.

1. Funding Competition

Over the past 20 years, the number of charitable organizations in the United States alone has grown continuously at an annual pace of 1.4%. charities must thus constantly compete with an increasing number of other charities in order to attract donors and persuade them to allocate their funds to their specific causes. It can be difficult for many groups to consistently raise the same amount of money year after year, especially when new charities are starting up.

The answer is to review the nonprofit's vision and purpose statements while also taking into account how and when to invest in fundraising activities. To attract contributors who are interested in certain issues, these statements should be as precise and unambiguous as possible. Nonprofits should think about doing more fundraising events, coming up with new methods to earn money, such applying for more grants, and actively developing tactics to keep their devoted supporters as the battle for funding gets more fierce.

2. Fatigue of Donors

Donor weariness may eventually develop in for nonprofits that have relied on consistent contributions from a certain group of donors, when major contributors cut back on their contributions or cease supporting certain causes entirely. When individuals lose interest in a cause and fear that their donations aren't having an impact, donor weariness may result. Additionally, circumstances beyond an organization's control, such as a downturn in the economy that causes donors to give less to charities in general, might result in a fall in donations.

The answer: There are several strategies nonprofits may use to address donor burnout. To ensure that their contributors feel valued, organizations should regularly thank and acknowledge them, communicate the impact of their contributions, and refrain from constantly requesting additional money from them. Organizations could also think about hosting donor appreciation events, where the primary goal is to celebrate the support that donors have already given and to highlight the positive changes that these donations have brought about in the community, rather than to raise more money. 

Read also: How To Value A Startup Before Funding

3. Scarce Resources

Although many NGOs are lean machines, organizations may face a number of issues if their resources are overextended. For instance, NGOs can find it more challenging to draw in and keep outstanding personnel if administrative cost is cut. Additionally, NGOs can struggle to provide staff training and the appropriate equipment without adequate funding, which might hinder volunteers' and employees' ability to do their duties well. These elements might cause NGOs to miss their fundraising goals, which could result in more resource cuts.

The answer: Nonprofits must carefully create a realistic budget that accounts for a range of costs, such as personnel, marketing, and event preparation, in order to fulfill their commitments to the communities they serve. Beyond individual contributions, organizations should also consider other funding options, such as applying for grants from public or private foundations, charging yearly or monthly dues in return for materials, information, or other advantages, looking for corporate sponsors, holding more fundraising events, and leasing meeting space to other groups.

4. Shifting Populations

Every generation has a unique combination of possibilities and difficulties. The values, reasons, and situations that NGOs must take into account frequently shift along with the demographics of contributors. It might be challenging for groups to sustain funding and influence if they don't follow the most recent trends.

The answer is that while creating new donor strategies, organizations should take into account the circumstances that characterize each generation. This might entail taking into account the experiences, technological expectations, and time and resource usage of several generations. For example, younger generations could expect an organization to offer a simple way to donate via mobile devices, but older generations would be more likely to submit handwritten cheques.

5. Economic Recessions

For nonprofits that aren't equipped to handle a drop in donations, recessions, economic downturns, and inflation worries can present challenges. People are frequently less inclined to donate at these times, which makes it difficult to meet fundraising targets. According to The Chronicle of Philanthropy, the number of contributors fell by 7% in the first half of 2022 compared to the first half of 2021. According to the research, the loss was mostly caused by a steep drop in the number of supporters who made little donations, serving as a reminder that every gift, no matter how big or small, counts.

The answer: Nonprofits should concentrate on keeping the donor base they have built through a range of outreach initiatives, such as launching recurrent giving programs and maybe enticing contributors to sign up for automatic gifts, during difficult economic times. Additionally, nonprofits should examine their financial situation closely and search for methods to reduce spending, settle debt, and put as much money as they can into reserves.

6. Insufficient Involvement

Donors may cease supporting a nonprofit if they feel cut off from it and its mission. In addition to making it more difficult for organizations to find new supporters, a lack of continuous interaction with funders and community members hinders their capacity to fulfill their objective.

The answer: Nonprofit organizations should refocus their communication strategy, carefully craft pertinent messaging, and make sure they are routinely informing their supporters on the effect they are making in the community in order to increase involvement. Additionally, they want to think about holding events to increase participation and give supporters a chance to serve, which may strengthen their bond with the group.