The Impact of Organizational Fundraising Capability on a Charity’s Profits from Private Donations

Abstract

Although fundraising organizations in the third sector have gone through a progressive professionalization process, it remains unclear whether this development has led to any financial benefits. This article focuses on the question of whether or not it pays off for fundraising organizations to invest in professionalization. The data for this study come from 165 organizations representing 45 percent of the Swiss fundraising market. We first propose the term "organizational fundraising capability" as a new construct for measuring the degree of professionalization and rationalization in fundraising management. We then analyze its relationship to overall net revenue from donations as well as the growth of net revenue from donations. Our analysis indicates that, in addition to organizational size measured by total revenue, revenue share from donations, and expansion strategy, fundraising capability makes an important contribution to explaining both an institution ' s net revenue from fundraising and the level of increase in net donations. The consequences for the development of professionalization and rationalization in fundraising are discussed.TO WHAT DEGREE IS THE FINANCIAL SUCCESS of a fundraising organization dependent on the level of its organizational capability to raise donations? Are charity organizations that strategically and systematically plan fundraising based on market analysis and scientific methods more successful than those working in a short-term, spontaneous, nonstrategic fashion?Despite persistent criticism of the progressive economization of the nonprofit sector and the related fears that such organizations are losing their philanthropic and social orientation, in

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