The New York Times screams “The Trump Administration has taken extraordinary steps to reduce federal grant funding to nonprofit groups.” According to the Times, “tens of thousands of U.S. nonprofits—aid groups, universities, hospitals,” and many other groups stand to lose an important part of their funding due to budget cuts.

I don’t seek an ideological debate over the types of groups being cut. However, I want to broach another question. Why are all these nonprofits depending on federal grants to begin with? Is seeking government grants the best fundraising strategy? I would say no. However, I will stipulate that a government grant to a nonprofit is not a bad thing at face value. I know numerous nonprofits that receive government grants and do good work. Yet, in these national stories I’m hearing phrases like “they are cutting our funding.” 

Why do some nonprofit leaders think the taxpayers should fund their cause? Businesses fail each year due to the lack of a good business plan, or because they weren’t in the right location, or because they didn’t have enough customers who wanted to buy their product, or because they weren’t well run. Here’s an idea. Why not let nonprofits compete in the marketplace and stand or fail on whether we can raise private support for our cause? My vision to change the world should not obligate someone else to fund it. As nonprofits, we have the privilege of sharing our vision to prospective donors, requesting them to join us in carrying out that vision. Some join us and some don’t. But I never assume that a donor has an obligation to fund my dream. 

According to the nonprofit governance group Candid, more than 35,000 nonprofits in the U.S. rely on federal grants for more than half their total annual revenue. On a bigger picture, Candid says more than 100,000 nonprofits receive a total of $303 billion dollars annually. That’s a whole lot of money. However, here is where many nonprofits make a key mistake.

The big money is still in the private sector!! According to the National Association of Nonprofit Executives and Organizations, more than 75 percent of all charitable funding comes from the private sector. Less than 20 percent comes from government or corporate grants. This means that nonprofit fundraisers who focus primarily on federal grants for most of their funding are missing out on the big money. If you’re fishing primarily for government grants to fund your nonprofit, you are fishing in the shallow end of the pond. 

I’ve made mistakes in fundraising. I’ve tried some things that didn’t work. However, I’ve also figured out with God’s blessing how to keep a faith-based homeless shelter running over the long haul. Our nonprofit made the decision years ago to not solicit government funds and we’ve never regretted it. I don’t need the hassles of government red tape, and I don’t want to get sued because we held a prayer service in a building paid for with the help of a government grant.

I realize there are bogus nonprofits with screwball mission statements that would be hard-pressed to raise private funds with their weirdo reason for existence. I also realize there are boondoggle nonprofits that exist to funnel gobs of government money to pet projects or people. But for all the real nonprofits out there trying to make a difference on a shoestring budget, I would say this.

If you run a nonprofit, you need a workable fundraising plan. If your fundraising plan is reliant primarily on government grants, you run the risk of having to close your doors if your grant gets cancelled. Yes, I’ve seen this happen to good, well-meaning nonprofits. You need a plan to raise money from private sources. I suspect this is why many nonprofits prefer the grant route. It appears easier to submit some grant proposals and hope to score with one of them than it is to gain and cultivate enough private donors to support your charity. 

Know that fundraising can be a bit of a gamble. At Gateway Rescue Mission, we have raised millions over the years using direct mail marketing. This money has fed hungry people, provided shelter for the homeless, and a spiritual program of recovery for people trapped in addiction. I didn’t know when we first started our mail program back in 2007 what would happen. I just knew we were broke and had to find a way to raise money. 

Understand that major donor cultivation is where the big dollars lie. However, developing major donors is a long game. It may take years for a $100 a year donor to make a gift of $5,000. Don’t underestimate the value of a written newsletter compiled by your staff mailed to your donors. A monthly newsletter to your donors keeps them in touch with what’s going on in your organization. Online giving is growing, but giving through your website or social media hasn’t replaced what we receive in donations through the mail. 

The nonprofits who pursue government funding as their primary source of revenue will always run the risk of losing big if they lose their grant. If you develop a dependable core of private donors, you will have insurance against whatever happens in Washington D.C.