Fundraising Update

Welcome to Fundraising Update. This week, we explore how transactional fundraising practices lead to burnout in a Q&A with fundraising coach Mallory Erickson. Plus, a new report raises concerns about how donor-advised funds are changing giving.

I’m Rasheeda Childress, senior editor for fundraising at the Chronicle of Philanthropy. If you have ideas, comments, or questions about this newsletter, please write me.

Thanks to our sponsor Kellogg School Center for Nonprofit Management for supporting Fundraising Update.

Burnout is, unfortunately, a common occurrence among fundraisers. While many people talk about ways to reduce it, not many discuss the root causes. Author Mallory Erickson hits this topic head on in her interview with my colleague Jenny Zou, delving into how some of fundraising’s most common practices can lead to burnout.

Erickson spent several years as a successful fundraiser, at one point growing a humble $300,000 nonprofit into a $3 million powerhouse.

She dreaded nearly every second of it.

Erickson writes about her experience candidly in the new book What the Fundraising: Embracing and Enabling the People Behind the Purpose.

Featuring chapters with titles like “This Job Feels Awful” and “Show Me the Money (but Don’t Talk About It),” the book unpacks what Erickson calls “transactional fundraising,” and how it keeps development professionals on a “hamster wheel” that leads to burnout.

Chronic stress led Erickson to reconsider her path in philanthropy and take up executive coaching. During the early days of the pandemic, she realized her new skills could help nonprofits navigate uncertainty and overcome a fear of fundraising during a global health and fiscal emergency.

Courtesy of Mallory Erickson

Since 2021, Erickson has trained more than 60,000 fundraisers online and in-person to rethink their approach using a trademarked framework that helps them identify the “right funders without hounding people for money.” Her podcast, “What the Fundraising,” has also featured guests ranging from psychologists to scientists who break down the latest research on how to cope in high-stress environments.

Jenny spoke with Erickson about how fundraisers can better align themselves, and their organizations, with donors.

The interview has been edited for brevity and clarity.

The history of the nonprofit sector since the Gilded Age has led to these scarcity myths. The first one is: There’s never enough money. The second is: We must compete for resources. The third is: We should operate with minimal overhead.

So much of our thinking and feeling about fundraising is mixed with stigma around money. I often say to people, “Don’t tell me what you care about. Show me what you track.” We say in this sector that we care about relationships, but we track money, right? We have created these transactional norms that are disingenuous ways that we believe will help us raise the most money.

People talk about the culture of philanthropy, and I think about the culture of fundraising. How do we create healthy fundraising cultures? What are the key pieces that indicate healthy fundraising cultures? How do we measure towards those things? How do we design expectations that are realistic and feasible and doable and appropriate?

These five elements of fundraising have been scientifically proven to increase stress: pressure, power dynamics, uncertainty, rejection, and isolation. All of those things are always going to be a part of fundraising, even really good fundraising. Some of the pressure is because of how deeply we love our work and our missions. So what does that mean? It means that we need unconventional strategies and tools to help us navigate a job and a world in which those things are part of our daily experience.

Burnout is a result of a chronic stress rate over long periods of time. We can work so hard to get people not working more than 40 hours a week or taking their PTO or having sabbaticals. Rejection is always going to be part of fundraising. How do we support people to be able to emotionally, physically, cognitively handle rejection? Let’s give them some tools for that.

For more from the interview, read Jenny’s entire Q&A.

— An estimate of the assets that will be held in foundations and donor-advised funds in 2026

Supporters with donor-advised funds have been touted as a valuable resource for charities in recent years. With money already set aside to give, they’re the perfect donors to tap in lean times, the conventional wisdom says.

But a new report argues altruism is losing ground to greed and self-interest as donations increasingly get structured as personal investments, reports my colleague Drew Lindsay. The new report examines the growing assets in donor-advised funds and foundations and the implications for the culture of giving. It projects that by 2028, DAFs and grant makers together will take in half of the dollars donated to charity by individuals. Already, they collect 35 percent.

Assets held by DAFs and foundations will top $2 trillion by 2026, the report says, a warehousing of enormous wealth that benefits a growing array of intermediaries whose processing fees and asset-management commissions siphon off money intended to do good.

“Philanthropy has become captured by the wealth preservation industry,” declares the report by the Institute for Policy Studies, a critic of DAFs and a proponent for legislation to force DAFs and foundations to distribute more of their assets annually.

The report is the latest salvo in a long-running debate over whether nonprofits are losing out as charitable giving is conducted through investment-like vehicles often managed by for-profit ventures. Three of the five largest DAF sponsors are nonprofit spinoffs of investment firms: Fidelity, Schwab, and Vanguard.

“We do see a muddying of the boundary between investing and philanthropy,” says Bella DeVaan, associate director of IPS’s Charity Reform Initiative and an author of the report.

DAFs, DeVaan says, provide extraordinary benefits to everyone but charities. DAF account holders enjoy significant tax advantages, can dispose of illiquid assets quickly, and still decide how to invest the money. Account administrators profit by charging fees on the assets and sometimes the donation transactions.

It may be years, meanwhile, before a donation that has triggered a tax deduction is put to use for the common good. “We just think that the benefits should go down” to charities themselves, DeVaan says.

For more, read the rest of Drew’s story.

What’s Stopping Billionaires from Giving? Ever wonder why some people with lots of money and a philanthropic bent aren’t giving? Apparently, it’s risk, logistics, and emotional hurdles, reports Thalia Beatty, who covers philanthropy at our partner the Associated Press.

According to philanthropy advisers, some of what stands in the way of the wealthiest giving is structural, like finding the right vehicles and advisers. Other obstacles are emotional and psychological, like negotiating with family members or wanting to look good in the eyes of their peers.

“It’s like a massive, perfect storm of behavioral barriers,” said Piyush Tantia, chief innovation officer at ideas42, who recently contributed to a report funded by the Gates Foundation looking at what holds the wealthiest donors back.

He points out that unlike everyday donors, who may give in response to an ask from a friend or family member, the wealthiest donors end up deliberating much more about where to give.

“We might think, ‘It’s a billionaire. Who cares about a hundred grand? They make that back in the next 15 minutes,’” he said. “But it doesn’t feel like that.”

To delve deeper into the psychology of wealthy donors, read Thalia’s full story.

Scott Wieler and Mary Baily Wieler gave $5 million to the University of Pennsylvania to establish the Wieler Family Professorship, a position that will focus on philanthropy. The faculty member will hold joint appointments in the School of Social Policy & Practice and in the Wharton School, the university’s business school.

Scott Wieler is a former chairman and CEO of DC Advisory US, a Washington investment bank. Mary Baily Wieler is a former CEO of the Museum Trustee Association, a Baltimore nonprofit.

For other notable gifts this week, read my colleague Maria Di Mento’s Gifts Roundup column.To learn about other big donations, see our database of gifts of $1 million or more, which is updated regularly and has data going back to 2000.

How to Strengthen Your Grant Proposals and Avoid Common Mistakes. Writing grant proposals has become increasingly complex. Veteran fundraisers share their advice to help you navigate the shifting landscape and win grants.

Are Fundraisers to Blame for the Giving Crisis? (Opinion)The fundraising powerbrokers at the Generosity Commission overlook their own role in alienating everyday donors.

The Real Value of a Charity Gala. Photos from lavish charity galas frequently adorn pop culture websites, but are the events really an effective tool for charities to fundraise? An article in the New York Times looks at what it costs to put on galas and what the value of the gala is to the organization — both in terms of actual dollars raised and donor goodwill.

A few gala stats from the Times:

• The Detroit Institute of Arts spent about $700,000 and after those expenses, netted close to $1 million at its gala.
• The Museum of Fine Arts, Houston, spent $400,000 and netted about $3.2 million at its gala.
• El Museo del Barrio expects to spend about $378,000, and net at least $972,000 at its gala next spring.
• The Los Angeles County Museum of Art gala cost $3 million to put on, netting $3.5 million.
• The Katonah Museum of Art gala cost $162,000 to run, and netted $180,909.

While the numbers in the article look good, experts in the story say that the value of galas goes beyond the dollars raised that night. Just as important is the goodwill the events build among big-ticket donors as well as the easy introductions to their wealthy friends.

“It pulls your support group together for a moment of celebration and recommitment to an organization when everyone sees each other — it builds an esprit de corps,” said Michael M. Kaiser, chairman of the DeVos Institute of Arts Management at the University of Maryland, who used to lead the Kennedy Center in Washington. “Many donors are not comfortable fundraising, but inviting someone to a gala is so easy. It’s a very simple quid pro quo, and it’s a way for board members to introduce their circle to an organization without a lot of effort.” (New York Times)