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The Big Picture: Systems Theory, Boundary Spanning, and Resource Dependence

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Systems theory provides a fundamental theoretical base for understanding fundraising (Kelly 1998; Tempel 1991). An organization that isolates itself from its environment can be considered a “closed system.” One that is influenced by social and economic trends and needs, and exchanges resources within its community is an “open system.” Simply put, charities do not exist in isolation. They exist within an environment and interact with that environment (Scott and Davis 2006). Typically, strong fundraising programs thrive in relatively open systems (see Chapter 11).

Individuals who raise funds for an organization function as boundary spanners, linking the organization with important resources in the external environment (Kelly 1998). Boundary spanners are essentially diplomatic liaisons who work to align the interests of those within and those outside the organization. Fundraisers seek to develop financial resources for an organization through cultivation, solicitation, and stewardship activities. They also listen to the interests and concerns of potential donors and look to find good linkages with the organization's mission. By interacting with potential donors on behalf of their organizations, fundraisers perform an important boundary‐spanning role.

Resource dependence theory explains why fundraising occurs and suggests some common organizational dynamics. The theory states that for organizations to survive, they must acquire necessary resources, and maintain their supply (Pfeffer and Salancik 1978). This means that organizations are not wholly autonomous in their financial decision‐making but rely on their environment for various resources. The greater an organization's dependence on voluntary contributions, the more volatile its revenue environment is (Carroll and Stater 2009), and the more likely it is to devote its time and personnel resources to developing financial resources (Heimovics, Herman, and Jurkiewicz Coughlin 1993; Hodge and Piccolo 2005; Nonprofit Research Collaborative 2015). This illustrates the importance of skilled fundraising.

Dependence on others leads to power considerations. When funding is scarce, the charity is more vulnerable to the demands of prospective funders, which may affect the organization's decision‐making autonomy. For instance, nonprofits that receive relatively high levels of government funding are less likely to have nonprofit boards that strongly represent their client constituents (Guo 2007). This dependence dynamic is also seen in an increasing focus on donor‐centered philanthropy, particularly for major donors (James III 2016c). If a donor (or grantor) is providing significant financial support, they may be keenly interested in affecting the design and administration of that program or the organization as a whole, and less attentive to the needs of the community or the organization's beneficiaries. Discerning the point at which a donor's engagement crosses the line into unwelcome or inappropriate territory can be difficult (see Chapter 2). Organizations may choose to diversify their revenue sources, including fees, dues, or commercial activities in order to lessen their dependence on any one funding source, and in so doing potentially diminish threats to control over financial and programmatic decision‐making (Carroll and Stater 2009).

Achieving Excellence in Fundraising

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