The Hidden Risk in Fundraising Success: Following the Money isn’t a Strategy

Gut-check time: Does your organization follow the money? Or build what’s sustainable?

A recent Chronicle of Higher Education article highlights the ongoing scrutiny of major donors and the influence they can have within institutions. And honestly? It has us talking!

But, let’s also be clear: nonprofits in other sub-sectors are not exempt from this behavior. At the same time, data from the Chronicle of Philanthropy and the CASE Voluntary Support of Education report highlights something even more structural:

Colleges and universities raised $78 billion (with a “B”), but 89% of those dollars came from just 2% of donors.

Yup! Let that percolate for a moment — 89% from only 2%!

What is mind blowing is that it isn’t just a statistic; it’s a philanthropic model, and one that should make all of us in the industry pause.

When the vast majority of funding comes from such a small group, institutions don’t just prioritize those relationships; they become utterly dependent on them. Decisions, strategies, and even timelines start to revolve around a handful of individuals. Not to mention the “mission drift” that can creep in–sometimes even without our knowledge (but that’s another blog).

And, whether we want to say it out loud or not, this shapes institutional behavior.

It shapes how we engage.

It shapes how we communicate.

And, yes, it can shape what we prioritize.

Organizations are raising more money from fewer individuals, and as an industry we’ve come to expect that this is met with celebrations and accolades. But in reality, it’s a growing risk we’re not talking about enough.

Why is this a risk? It is not sustainable.

The Chronicle makes that clear. Much of the growth in giving is coming from older donors, while at the same time institutions are being pushed to rethink how they engage younger generations (as we all should!) who don’t give out of loyalty alone, but because they believe in the impact. Frankly, they expect it.

At the root of it, the relationship between older donors and institutions and younger donors and institutions is a fundamentally different relationship. We know younger donors are engaging in advocacy, participation, and connection long before they give. During this courtship period, they are actively observing organizations and wanting to know:

• What difference does my gift make?

• Do your actions match your values?

• Can I trust how decisions are made?

Which means if your organization’s strategy is still built around a small number of major donors, you may be meeting today’s or this fiscal year’s goals, but you are catastrophically missing tomorrow’s reality.

Here is where the tension enters: pressure to fund the mission is real. Especially now, as institutions face increasing uncertainty around public funding and research dollars. That pressure doesn’t just influence strategy, but also accelerates reliance on the donors who can give the most, the fastest. The practice isn’t inherently wrong; however, it is risky. In effect, we have built a highway with no off-ramps for institutions to exit, refocus, and realign strategies to be donor-centered.

Speaking of…when we talk about being donor-centered, we have to be honest about what that really means.

Is it centering on the donor who gives the most?

Or is it building a model that reflects the needs, values, and expectations of the donors we’ll rely on in the future?

In response, institutions must think differently and consider taking steps now to evaluate:

• Are they over-reliant on a small percentage of donors?

• Are they investing early in relationships with younger, impact-driven supporters?

• Are they measuring engagement—not just dollars?

• And are they building a broad base of trust? Or a narrow base of funding?

Because the future of fundraising isn’t just about how much you raise. It’s about how you raise it and how you engage those you raise it with. The institutions that will thrive in the future won’t just be the ones who secure the largest gifts. They’ll be the ones who build the strongest, most aligned and centered, and most sustainable communities of support.

Because in the end, this isn’t just about money. It’s about looking inward and being honest with ourselves that the tried and true models simply won’t cut it any longer. It’s about rebuilding philanthropic models today so that our missions can be supported tomorrow.

Written by Travis Tester, DRG Project Specialist