How to Grow Revenue Instead of Cutting Costs

For most United Ways, revenue has been shrinking for years. There are many reasons – workplace campaigns continue to decline, donors are retiring, the younger generation does not engage with United Way, and technology allows people to easily give directly to local charities. In response, United Ways are often forced to cut costs. Since staff costs are typically the single largest expense for most United Ways, cutting costs means cutting staff. When staff positions are cut, it becomes even more difficult for United Way to raise revenue.

Combining back office services and mergers are two of the more extreme ways United Ways cut costs. Combining back office services has always been done to cut costs – United Ways have never combined back office services so their costs would increase. Most United Way mergers result in reduced costs, but there are many instances where a merger has resulted in significantly decreased revenue – which means several years after the merger costs need to be cut again.

There is only so far you can go with cutting staff, combining back office services, or merging before a United Way will not be able to function.

Cutting costs is not a long-term sustainable strategy for United Ways.

Instead of cutting costs, a more appropriate, albeit harder, strategy for long-term United Way sustainability is growing revenue. There are no pots of gold at the end of a rainbow out there for growing revenue at United Ways. United Ways are trying all sorts of methods for growing revenue such as starting more workplace campaigns and implementing digital giving platforms. But these methods are not going to generate more revenue for United Ways. Why? Because these methods are how people give to United Way, not why people would give to United Way.

The key to growing revenue at your United Way is your donors. Only your donors can answer questions like: “Why would a donor give to United Way?” or “What value does United Way provide to a donor?”

We have surveyed thousands upon thousands of local United Way donors and non-donors across the United States and consistently found that:

Most United Ways are not selling what donors want to support.

If United Ways are going to grow revenue, they must sell what donors want to support. From our research and work with over 100 United Ways, we have found there are only TWO causes United Ways can address that donors are willing to support.

First, you can grow revenue by focusing everything you do on supporting partner agencies. You can do this by making it clear to donors exactly which agencies you are supporting, telling the stories of those agencies, sharing the agencies’ outcomes, and allowing donors to designate directly to agencies. This is a mutual fund approach to charitable giving – donors’ contributions support a wide variety of local agencies. There is a segment of donors who will support United Way to do this work and United Ways that have adopted this approach grow their revenue.

Second, you can grow revenue by focusing everything you do on addressing a single issue like poverty, homelessness, or the graduation rate. You can do this by making it clear to donors what issue you are addressing, telling stories of how people are affected by the issue, and sharing stories of people who are no longer impacted by the issue. This approach to charitable giving empowers donors to change their community – donors’ contributions result in less people living in poverty, more people who have a home, or more students graduating.  We call this approach the issue-focused model for United Ways. There is a segment of donors who will support United Way to do this work and United Ways that have adopted this approach grow their revenue.

You might be asking “If our United Way does both of these causes will our revenues increase?” The simple answer is no. Donors who want to see local nonprofit organizations succeed will not want to see money taken away from partner agencies to address a specific issue. Conversely, donors who want to see a specific issue change in their community will not want to see money going to all sorts of agencies who work on other issues. We can show you examples of United Ways that raise more money every year who are all about funding local agencies, and we can show you examples of United Ways that raise more money every year who are all about addressing a specific issue. What we cannot show you is a United Way that raises more money trying to fund agencies at the same time they are trying to address a specific issue.

Growing revenue requires a laser focus on selling what your donors want to support.

Do you want to stop cutting costs and grow your revenue? We help United Ways do this everyday. We start with our Challenges and Opportunities Retreat, which is an opportunity for your board and staff to think about the purpose of your United Way and what your donors want and need. We can help your United Way decide whether or not you should focus on supporting partner agencies or addressing a specific issue in your community. Once you decide on supporting partner agencies or addressing a specific issue in your community, we can help you develop a strategic plan to implement the strategies and tactics to grow your revenue.

Stop cutting costs and start growing revenue to ensure your United Way’s long-term relevance and sustainability by selling what your donors want to support.