Peter Haas, the Executive Director of the Appropriate Infrastructure Development Group (AIDG), has a strongly-worded post up on the TED Fellows blog called Show Me The Money – Disasters, Restrictions and The Future of the Fund Raising Industry.  If you’ve ever thought that this “fundraising question” is something off to the side for nonprofits, read Peter’s post.

Peter argues that there’s an untapped business opportunity for professional fundraisers.  The logic goes as follows:

• It’s really hard to raise money as a small nonprofit
• Large, capacity-building grants are harder to come by than they were in the 80s and early 90s
• It’s too expensive for small nonprofits to hire salaried fundraising staff who can raise millions of dollars
• Many nonprofit CEOs aren’t good at this
• And, Peter implies, maybe it’s not a particularly good use of nonprofit CEOs’ time to fundraise (in Peter’s words, “I’ll tear through the BS in a system and get to the core error. But I’m not a salesman for high end luxury goods.”)

Peter proposes that professional fundraisers could fill the gap by signing up as fundraisers for hire, taking a cut of the funds they raise. This way, goes the logic, nonprofits don’t have to pay hefty salaries upfront, and fundraisers who have proven that they can raise real money can work their magic.  In Peter’s words: “Somebody accustomed to raising 50-100 million for a big org could probably do a lifestyle changing business, cutting their work week dramatically while earning the same salary, by only raising 10-20 million divided between a handful of smaller up and coming orgs.”

It’s an interesting idea.  In truth there are a handful of these people out there, and I think they and the sector would get a nice shot in the arm if more people stepped up to take this kind of risk and put their skills to use for small, growing nonprofits.

But before we go too far, let’s dig a little deeper into Peter’s post, since he says out loud something that is often left unspoken, namely:

If the mission of the NGO is the service to the community, and fund raising is truly something administrative (as most donors like to classify it in cost analysis), then it should be something an NGO can easily subcontract.

This is where we, our donors, and the sector as a whole go awry – when we think that there’s the “real work” of the nonprofit and this peripheral activity of raising funds.

In 2008 I wrote a Manifesto for Nonprofit CEOs.  Here’s an excerpt:

I’ve met too many nonprofit CEOs who say “I hate fundraising.  I don’t fundraise.”  If you’re being hired as a nonprofit CEO and the Board tells you that you won’t be fundraising, they’re either misguided or lying.

Tell them they’re wrong.  Tell them that your job as a CEO is to be an evangelist for your idea and to convince others about the change you want to see in the world.  Tell them that if this idea is worth supporting then they should jump in with both feet and support it with their time and money and by telling their friends it is worth supporting.

Spending your time talking to powerful, influential people about the change you hope to see in the world is a pretty far cry from having fundraising as a “necessary evil.”

Apparently I still have a few people left to convince.

Which got me thinking, again: why do we keep on running into this wall in the nonprofit sector?  Coke just sells colored sugar water, yet the people who make it a multi-billion dollar company are the storytellers who created and sustained the brand over the past 120 years.

What’s so different in our sector?  Is it because the people we serve (“beneficiaries”) and the people we who are our source of revenues (“donors”) aren’t one and the same person?  And do we honestly think that this bifurcation of stakeholders is healthy or sustainable?  Is there even another sector where we would entertain this kind of dichotomy?

Let me put it another way: if a CEO of anything but a nonprofit said, “I’m starting a new business.  I see a gap in the market and I’m jumping in with both feet and am prepared to sweat blood to make this thing work.  But I don’t want to deal with the whole revenues side of the business.  I’m not THAT guy.”   Could a tech entrepreneur say that they’re not willing to talk to customers and VCs?  Did Kelly Flatley and Brendan Synnott, the founders of Bear Naked, say they’re weren’t willing to talk to the folks at Whole Foods?  Of course they didn’t.  How is this any different?

I’m not saying it’s not hard to raise millions of dollars in grant funding – it is hard. It’s really, really hard.  And this isn’t the same skill as being on the front lines making your programs work.  And, sure, a gutsy fundraiser-for-hire could help.  But funders aren’t cash registers, funding conversations aren’t switches seamlessly from one organization to another, and any nonprofit CEO who thinks he is going to secure million-dollar gifts without seriously rolling up his sleeves and being the person those funders bet on is wishing for a market opportunity that just ain’t there.

So my question for Peter is: are you proposing a short-term solution to a cashflow issue (“I need someone today to help me raise that first million”) or a business model issue (“what I do as the ED is and should be separate from this whole fundraising thing.”)?

If it’s the first one, let’s go for it.  If it’s the second, then I think we’re kidding ourselves.