Nonprofits Need to Lose the “Free” Mindset. Now. Please.

April 14, 2010

There’s an old adage (cliche’?) that “you get what you pay for.”

Try telling that to nonprofit organizations.

Several years back I worked with a small nonprofit agency with an annual budget of approximately half a million dollars.  Early on in my role as development director – and throughout my two year tenure – I was admonished by the executive director to “weed out” the donor database.

You see we were using eTapestry, a web-based fundraising and donor management system.  At that time eTapestry was free for users – as long as your database contained less than 500 names.

I’m serious.  True story.

Web hosting costs all of, what? – $9 to $15 a month?

Yet nonprofit organizations will do everything in their power, including spending considerable time and effort (uh, last time I checked, time was money), to locate free web hosting.

Same with email marketing providers, graphic designers, writers … the mindset is “we’re a nonprofit – what kind of deal can you give us?”

When you go with the “free” service or the cheaper service, there’s also the (usually) warranted perception that “you get what you pay for.”

{ 13 comments… read them below or add one }

Steve Thomas April 14, 2010 at 11:41 am

Thanks for the great thought. It is so tough for many NPOs because they are on tight budgets and it can seem like a great idea to cut costs.

When I was leading an NPO my CFO used to caution against “penny-wise, pound-foolish” thinking. Once I figured out he wasn’t making a crack about my weight and he was referencing British currency I got it.

Purging names is like throwing away assets. I do have to say, that I’m a fan of keeping names but not treating them all the same way (wouldn’t mail to everyone but that’s another blog post).

Hoots and I once worked on a situation similar to what you describe but it was taking over a 1 million names down to 100,000. Not wise, fun or a good strategy, but it was quite an experience.

Thanks for your great wblog, love the way you think.

Michael Wyland April 14, 2010 at 1:50 pm

I’ve been a consultant to nonprofits for 20 years. Many nonprofits are penny wise and pound foolish, walking away from opportunities. Of course, their for-profit counterparts are far less willing to accept a quoted fee; they’re always looking for an opportunity to negotiate.

I was a trustee of a national foundation several years ago. Annual fund donors giving at least $100 received a pin that cost about $1.75. We ordered 1,000 pins and ran out. The staff refused to order more pins! I tried to explain that spending less than $4,000 on recognition for more than $400,000 in annual gifts was not a bad deal, and that a securing a single $1,000 donor (like me) would pay for a lot of the pins! BTW, almost all the funds were raised at regional conferences by volunteers asking for gifts.

Chris Dumas April 15, 2010 at 11:33 am


You have some great points.

Nonprofits need to be more ROI focused. While I see many nonprofits not invest in something wise, I have also witnessed organizations dump money into some very bad “investments.”

I want to bring up our view about free stuff. You may know that our donor management software product – – has a free version.

We made it so it comes with Unlimited Donor records, Unlimited Donations, Unlimited Users and Free support. We did this for three reasons:

1) Because small organizations need something that works too.

2) We hope that organizations see the value in our product and invest in upgrading to get more reporting and segmentation functions as they mature.

3) We want nonprofit professionals to say nice things about us to their colleagues. Word of mouth is the best marketing channel for us – it means we are of value and are useful.

Our entire team has worked at nonprofits and hated complex and confusing pricing sheets that quickly add up. We keep everything simple – including the pricing.

I would like to point out that Donor Tools has the policy that customers on the free plan are still customers and we treat them the same as if they were paying.

Not all things free are bad investments – but knowing when not to spend money can be expensive.

Pamela Grow April 15, 2010 at 12:06 pm

I concur Chris. I’ve worked with a handful of organizations that were using Raisers Edge – when something far less expensive would suffice. Rarely is the RE user using the full potential of RE – not through any fault of the software company but usually due to high turnover and poor policies and procedures.

I’m very interested in learning more about Donor Tools and appreciate your insight.

Mazarine April 18, 2010 at 9:51 pm

Dear Pamela,

Thanks for this post. I answered a question on LinkedIn recently about how churches expect everyone to do everything for free. Now some churches I know are hiring executive directors, but are not willing to hire a fundraiser, even a part time consultant, to help them make more money. It boggles the mind to think about how they’re willing to invest in a person who could lead them, but who doesn’t have fundraising experience, and just depend on volunteers to raise the money.

Hopefully, someday nonprofits will learn that unless they hire someone with a lot of fundraising experience, they’re not going to get far.

And the person who asked the question said he had the same problem with faith communities, they didn’t even want to pay an electrician to come and work on their wiring, they wanted someone to do it for free (illegally I might add!) Truly ridiculous. Ramit Sethi of says, “Forget nonprofits. They are not willing to pay for quality.” Your thoughts, Pamela?


Pamela Grow April 19, 2010 at 3:18 am

My significant other of eight years is a marketing consultant. He’s been telling me that for years (“Forget nonprofits. They are not willing to pay for quality.”). I’m out to convince him he’s wrong :), change the mindsets of nonprofits to realize that they must be as committed to funding their mission as the mission itself, and effect change in my own way. What’s the first thing most people think of when you say the word “fundraising?” Nine times out of ten the answer I get is “events.” Yet what has the lowest overall ROI?

Erin April 23, 2010 at 6:29 am

I worked for an NPO with a $40m budget whose CIO had this mentality. It would be mortifying to sit in negotiations with software vendors where he’d start the conversation off with how we expect the service/software for free. They would look at us like we had 5 heads. The result was always that the vendor would no longer take us seriously or give us much respect.

Kevin MacDonell April 24, 2010 at 4:10 pm


I gave a presentation recently on the subject of data mining for a group that consisted almost entirely of non-university nonprofit folks. I knew that many of them had databases that were really not adequate – certainly not ready for data mining – probably due to cost, and limited staff time to devote to doing a proper job. I wondered, is there any potential for smaller nonprofits to pool their donor data and let someone else worry about the business of maintaining a database? (I describe my thought here: This is somewhat peripheral to your subject of your post; it just comes to mind as I read it.

Rob April 26, 2010 at 5:18 pm

I know of non-profits who pride themselves on using all volunteers and have no systematic fund raising process, except mailing campaigns to individual donors. They are missing opportunities from many foundations, but won’t pay for a grant writer.

Guy McLaren June 18, 2010 at 6:36 am

We recently started a non profit and know we need to pay for services. Here is the kicker we are willing to pay for services but as yet don’t have the money. Any fundraisers willing to work for a percentage of funds raised talk to me.

Robin Stein February 8, 2011 at 6:06 pm

So….I read this because I thought you were speaking to the issue that non-profit folks tend to think about giving away our services for free instead of truly valuing the work we do and putting a price tag on it that’s reasonable, yet worthy of the real cost. It’s a challenging problem in our arena. We social work, non-profit folks tend to think with our hearts and our hearts tell us that everyone deserves to access counseling, programming and even health services….free of charge. It’s a difficult mind set to shift; a true culture change, especially in this current economic environment. We do what we do because we care but that doesn’t mean that we shouldn’t place value on what we provide. Think of it! Would you ever go to your doctor and say, “I can’t afford your co-pay, can I get a sliding fee?” Would your check out person at your grocer ever engage in a dialogue about what you’re able to afford to pay? Can you walk in anywhere intent on a purchase of an item you need, want or desire and ask them what’s the least amount you can pay for it? Things of value cost money. Our mental health and the health of our communities can not be thought of otherwise.

Ryan Myers February 11, 2011 at 7:31 am

I couldn’t agree more, Pamela. Quality services cost money. There’s no getting around it.

However, as service providers to non-profits, it should be our goal to aid them in gaining the funding for the service they need.

That’s the approach we’ve taken at STREETLIGHT. Quality branding isn’t cheap. But, in order to relieve the financial burden from the organization, we’ve created a free downloadable presentation that they can present to their board and potential donors to explain the value of branding and spell out the exact cost of walking through our branding process. They have the opportunity to raise funds then and there.

You can learn more and download the materials at

Thanks, Pamela!

Amy February 20, 2011 at 10:41 am

Hi Pamela,

I agree with your thoughts (as usual) but I think the smaller nonprofits are the ones facing the larger challenges right now. Technology has changed so drastically in the past five years and for nonprofits that fell behind (or didn’t have the resources to upgrade their systems) there’s a big chunk of change in paying to update all your systems now. Unfortunately, there’s limited options in packaging your needs together and in most cases the companies that do offer systems that compliment each other are asking extreme fees. When evaluating my chapter, we needed upgrades in our donor and volunteer management systems, online fundraising sites, website, social media sites, email server, etc… The companies that offer these services (and I don’t think there is one that offers them all) had to be passed because our Board (like many others) couldn’t justify the hefty price tag. As a result we are working with several different companies to upgrade our systems. You get what you pay for is certainly true and I imagine in five years we will once again re-evaluate our systems and look for upgrades. And although we don’t have the ideal platform that I envisioned, two years ago we didn’t have an online fundraising site, online auction site, social media sites and we were not even considering a new website. On the other hand, working with a smaller budget makes things a whole lot different – we have several gaps in our staffing needs and marketing/ pr would increase awareness of our organization and in turn our revenue – but hiring a consultant is again not an option (especially since we are working with a grants consultant and upgrading all of our online systems and databases). I truly wish that all nonprofits could have the resources to hire full time staff for social media, PR/ Marketing, IT, grant prospecting and writing .. etc. I just think we all operate differently and taking those funds away from our services is not an option. It reminds me of when I got married and my mom said “choose your battles”…

Thanks for the great post!

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