Nonprofit Spending in a New Light
The other day, I popped into a Sodalicious for my daily caffeine fix: a 24-ounce Diet Coke with fresh lime, please and thank you. Just as I was about to pay, the iPad at the register swiveled around and flashed a question: Would I like to round up to help fund children's schooling? I paused, wondering if the 14-year-old cashier would judge me if I declined. Would she secretly think I was a terrible person for saying no? At that moment, I wondered where my 37 cents would go. Would it buy a crayon? A single piece of chalk?
How much good could my pocket change really do?
This lighthearted moment got me thinking about how a shift in our perspective on giving can truly empower nonprofits and boost their impact. Nonprofit organizations face significant challenges, including advertising limitations and time constraints that hinder their effectiveness. However, partnerships with businesses can enhance a nonprofit's ability to create positive change.
Nonprofit Advertising Limitations
Nonprofits often struggle to reach potential donors due to limited advertising resources. (Imagine working a construction job with only half of a toolbox.) Unlike for-profit businesses, nonprofits often have small budgets for marketing.
Feeding America is a nonprofit that proves the potential of a marketing budget. They effectively raise awareness about hunger through expensive and strategic advertising campaigns. These campaigns are successful and reach millions of donors. In 2023, Feeding America spent just over $16.3 million on advertising. That is the equivalent of spending $1,000 a day for over 44 years. At the same time, smaller nonprofits that also focus on hunger in the U.S. struggle to get noticed due to their shoestring advertising budgets. With fewer dollars at their disposal, smaller nonprofit organizations are hesitant to invest the little they have.
Dan Pallotta once said, “Disney can make a new $200 million movie that flops, and nobody calls the attorney general. But you do a little $1 million community fundraiser for the poor, and it doesn't produce a 75% profit to the cause in the first 12 months, and your character is called into question.” Nonprofit organizations face pressure to deliver immediate results. This pressure can stifle innovation, hurt fundraising, and instill fear of failure. If organizations are never allowed to fail, they will never innovate. Without embracing innovation in fundraising, nonprofit organizations cannot grow or help alleviate social issues.
Expenditure Comparison
Figure 1 shows that for-profit businesses spend over 20% of their revenue on advertising, while nonprofits typically spend less than 10%, according to the National Philanthropic Trust’s Annual Report in 2022. Because there is a significant budget difference, nonprofits often rely on free community events and social media to engage potential donors.
Figure 1: Industry Advertising Spending
Businesses spend twice as much on advertising as nonprofits do.
Ethical Spending
Beyond budget constraints, nonprofits face ethical concerns when spending money on advertising. Many donors are concerned that aggressive marketing tactics may pull resources away from the organization's purpose. This belief, often referred to as the “overhead myth,” pressures nonprofits to minimize spending. The public wants results and to maintain public trust, nonprofits typically prioritize low-cost, short-term advertising practices over strategic marketing investments. They want results. Nonprofits recognize that people are hungry and homeless—right now.
My question for you is this: What if we thought about advertising dollars differently? What would it look like to think about marketing as a positive investment opportunity? This shift in perspective could empower nonprofits to better achieve their long-term goals. Those who work in the nonprofit sector would be allowed to innovate, grow, and address social issues.
Time Restraints
in Fundraising Spaces
In the Corporate Social Responsibility (CSR) fundraising landscape, nonprofits face a ticking clock. Immediate needs and project deadlines can lead to a focus on quick results rather than long-term effectiveness.
Urgency and Pressure
Nonprofit organizations face the challenge of balancing urgent needs with long-term goals. Nonprofits often feel pressure to launch quick campaigns, and while these campaigns may satisfy short-term expectations, they can put long-term goals at risk.
According to Brent Never in Nonprofit Sector Quarterly, “Economic recessions often compel nonprofit leaders to prioritize immediate outcomes over sustainable growth strategies.” This emphasis on quick outcomes can lead to decisions that overlook the organization’s core mission.
The pressure to deliver quick results also contributes to high employee burnout rates within nonprofit organizations. According to the Center for Effective Philanthropy (CEP), 95% of nonprofit leaders share concerns about burnout. More than a third of leaders indicated that staff burnout has been a major concern for them in the past year, as shown in Figure 2.
Stakeholder Satisfaction
Focusing on the “quick” results can lead to employee burnout and dissatisfaction among stakeholders. These fast-tracked projects often fail to meet stakeholder expectations and may result in reduced funding if not quickly addressed. Without a long-term approach, nonprofits struggle to effectively scale their operations.
Figure 2: Original Graphic, Source: Nonprofit Leaders’ Levels of Concern About Staff Burnout in 2023 and 2024
Time as an Asset
While time is a valuable resource in the nonprofit sector, its constraints can hinder progress and kill employee motivation. To succeed, nonprofits should take charge of their time instead of letting it control them. By focusing on long-term goals, they can lift the burden of stress from the shoulders of employees and better fulfill their mission statements.
Achieving a balance between quick results and long-term objectives is essential, and this begins with a mental shift. Let’s encourage nonprofits to prioritize longer, more thoughtful projects that address underlying issues in society instead of relying on superficial, “Band-Aid” solutions.
By encouraging this type of mental flexibility, nonprofits can boost their impact and better achieve their goals.
Business and Nonprofit Partnerships
Partnerships between nonprofits and businesses can be transformative, providing enhanced resources and increased visibility to both parties. Collaboration enables nonprofits to access funding, marketing expertise, and networking opportunities.
One can argue that it would be nothing short of criminal to discuss the marriage of business and charity without acknowledging Cotopaxi.
What Cotopaxi Gets Right
Cotopaxi serves as an excellent example of a successful business and nonprofit collaboration. The company donates a portion of its profits to combat global poverty and responsibly outsources labor to ensure that workers are paid a livable wage. Cotopaxi is known as a brand that can “Do Good”, inspiring customers to become more socially conscious. In short, Cotopaxi has strategically popularized the intersection of business and charity. They have made the act of giving—for lack of a better term—awesome.
Other Successful Examples
Warby Parker and TOMS Shoes have also set high standards for collaboration. Warby Parker's "Buy a Pair, Give a Pair" model and TOMS’ commitment to donating shoes both demonstrate how popular businesses can integrate social responsibility into their daily operations.
Socially Conscious Shoppers
Ethical shopping is a powerful force in modern-day consumer behavior. According to the 2021 Edelman Trust Barometer, 68% of consumers believe that companies should address societal concerns. This statistic shows that consumers are looking for ethical options when shopping. They want to spend money on brands that are making a positive difference in the world. As David Brooks says, "Nobody wants to see a jerk get rich."
If businesses partner with socially responsible nonprofits, they will create stronger connections with ethical customers and drive sales in competitive market spaces.
A Case for Collaboration
Sharma and Bansal's study demonstrates that partnerships between businesses and nonprofits also offer substantial benefits to both entities. Figure 3 identifies seven key advantages that these collaborations provide. These benefits have the potential to help nonprofits effectively address challenges related to advertising and time constraints.
The Wrap
After examining these challenges, it’s clear that meaningful change is possible by rethinking our approach to charities and how they spend their resources. By addressing the advertising limitations, navigating time constraints, and fostering important business partnerships, we can enhance the effectiveness of nonprofit organizations.
As business students, we have the potential to change the world. As followers of Christ, we have the responsibility to do so. If you don’t believe me, you should go read Matthew 25.
This starts with a fundamental shift in our perspective. We have the power to create meaningful change and fulfill our responsibility to make a difference in the world.
Dan Pallotta captured this idea when he said, “Our generation does not want its epitaph to read, ‘We kept charity overhead low.’ We want it to read that we changed the world, and that part of the way we did that was by changing the way we think about these things.”
Let’s embrace this challenge, rethink our approaches, and work together to leave a legacy that we are proud of. The time for change is now.
This article reflects the views of the student author and does not represent the official position of Brigham Young University or its affiliated organizations.
About the Author:
Emma is a senior at Brigham Young University’s Marriott School of Business, where she is studying marketing with a minor in nonprofit management. Currently, she works in the marketing department for the Church of Jesus Christ of Latter-day Saints.
Emma has a passion for research and consumer behavior. Residing in Salt Lake City, she enjoys traveling, reading, and drinking Diet Coke.
Notes
- Feeding America, Hunger in America: A Study of Food Insecurity, Feeding America, June 30, 2023, https://www.feedingamerica.org/sites/default/files/2023-12/Feeding%20America_23_FS_Final.pdf.
- Dan Pallotta, "The Way We Think About Charity is Dead Wrong," TED, 2013, https://www.ted.com/talks/dan_pallotta_the_way_we_think_about_charity_is_dead_wrong.
- Bianca Miller-Cole, "Innovate or Die: How a Lack of Innovation Can Cause Business Failure," Forbes, January 10, 2019, https://www.forbes.com/sites/biancamillercole/2019/01/10/innovate-or-die-how-a-lack-of-innovation-can-cause-business-failure/.
- Nader Tavassoli and Christine Moorman, "The End of Averages for Marketing Budgets," MIT Sloan Management Review, November 16, 2023, https://sloanreview.mit.edu/article/the-end-of-averages-for-marketing-budgets/.
- 2023 Donor-Advised Fund Report,” National Philanthropic Trust, 2024, https://www.nptrust.org/wp-content/uploads/2024/07/2023-DAF-Report.pdf.
- Adam Weinger, "Nonprofit Advertising: The Best Advice and Persuasive Examples," Double the Donation, accessed on February 18, 2025, https://doublethedonation.com/nonprofit-advertising/.
- Greg McRay, “Why Nonprofit Overhead Matters: Debunking the Overhead Myth Once and For All,” Foundation Group, January 3, 2025,
- Daniel Soucy, Makenna Janes, and Andrew Hall, “State of Homelessness: 2024 Edition,” National Alliance to End Homelessness, accessed March 10, 2025, https://endhomelessness.org/homelessness-in-america/homelessness-statistics/state-of-homelessness/.
- Amanda Pearce, "The Importance of Strong Nonprofit Board Governance," GrantStation, accessed October 26, 2024, https://grantstation.com/gs-insights/The-Importance-of-Strong-Nonprofit-Board-Governance.
- Brent Never, "Understanding Constraints on Nonprofit Leadership Tactics in Times of Recession," Nonprofit and Voluntary Sector Quarterly 40, no. 6 (2011): 990–1004, https://doi.org/10.1177/0899764010378357.
- Chloe Heskett, "Nonprofit Leaders Cite Burnout as a Top Concern in a New Study on the State of U.S. Nonprofits," The Center for Effective Philanthropy, https://cep.org/news/press-releases/nonprofit-leaders-cite-burnout-as-a-top-concern-in-a-new-study-on-the-state-of-u-s-nonprofits/.
- Kelsey Piper, "The Case for 'Band-Aid' Philanthropy," Future Perfect, Vox, March 6, 2019, https://www.vox.com/2019/3/6/18245135/philanthropy-charity-case-for-bandaid.
- "Our Mission," Cotopaxi, https://www.cotopaxi.com/pages/about-us.
- “Buy a Pair, Give a Pair,” Warby Parker, accessed February 18, 2025, https://www.warbyparker.com/buy-a-pair-give-a-pair?msockid=3f3a3459a39a69d72daf26a1a2d66855.
- “TOMS Wear Good,” TOMS, accessed February 18, 2025, https://www.toms.com/impact.
- “2021 Edelman Trust Barometer Press Release,” Edelman, January 13, 2021, https://www.edelman.com/trust/2021-trust-barometer/press-release.
- David Brooks, "The Moral Bucket List," The New York Times, April 11, 2015,
- Garima Sharma and Pratima Bansal, "Partners for Good: How Business and NGOs Engage the Commercial–Social Paradox," Organization Studies 38, no. 3–4 (2017): 341–364, https://doi.org/10.1177/0170840616683739.
Pallotta, “The Way We Think About Charity”.