Navigating the Nonprofit Fundraising Landscape
The nonprofit sector is the backbone of community impact, yet many small and mid-size organizations are struggling to secure the funding they need to sustain and grow their missions. With declining donor retention, shifting grant funding priorities, and increased competition for philanthropic dollars, nonprofit leaders are facing more challenges than ever before.
As a nonprofit mentor and fundraising strategist based in Appalachia, I wanted to take a deeper dive into the state of fundraising for small and mid-sized nonprofits—especially in rural communities like mine. What are the biggest struggles nonprofits are facing? What’s working? And, most importantly, how can we better support these organizations?
To answer these questions, I conducted a deep analysis of fundraising trends over the past three years, drawing from national reports, regional data, and insights from nonprofit professionals. Here’s what I found.
Key Fundraising Challenges for Small & Mid-Size Nonprofits
1. Donor Retention is Declining
The reality is stark—donor retention is at its lowest level in recent history. According to the Fundraising Effectiveness Project:
- Overall donor retention fell to 42.6% in 2022, continuing a downward trend.
- First-time donor retention is especially low—only about 20% of new donors give again.
- However, securing a second gift increases retention rates to ~60%, highlighting the importance of donor stewardship.
Strategic Focus: Nonprofits need to prioritize donor relationships, engage supporters beyond the initial gift, and focus on consistent stewardship strategies.
2. Digital Fundraising is Growing—But Not for Everyone
Online fundraising continues to rise, with digital giving increasing over 40% in the last three years. Yet, not all nonprofits are equipped to take advantage of this growth. Many smaller organizations lack the tools, strategy, or capacity to fully leverage digital fundraising.
- Social media fundraising is increasing, but results are mixed—Facebook fundraisers account for ~1% of online revenue.
- Mobile giving (text-to-give, peer-to-peer fundraising) is growing, but adoption rates among small nonprofits remain low.
- Appalachian nonprofits face a digital divide, with 22% of households lacking broadband access, limiting online giving potential.
Strategic Focus: Small nonprofits need more training and access to affordable digital fundraising tools to capitalize on online giving trends.
3. Grants are Highly Competitive & Restrictive
While many nonprofits rely on grants for funding, the competition is steep:
- The average grant success rate is 14% (1 in 7 proposals gets funded).
- Many grants are one-time awards, creating sustainability challenges.
- Only 7% of national foundation grant dollars reach rural areas, making it even harder for Appalachian nonprofits to access funding.
Strategic Focus: Organizations need better grant readiness strategies, capacity-building funding, and stronger storytelling in proposals to improve success rates.
4. Fundraising is Getting Harder, Not Easier
Economic challenges, donor fatigue, and increasing demand for services are putting pressure on nonprofits:
- 78% of nonprofits report increased demand for services, but only half have seen an increase in funding.
- Charitable giving dropped 10.5% in 2022, one of the largest declines on record.
- Many small nonprofits lack dedicated fundraising staff, making it harder to sustain fundraising efforts.
Strategic Focus: Small and mid-size nonprofits need more support in building sustainable revenue models, diversifying funding streams, and engaging board members in fundraising.