Why donors are better than grants

Tom Iselin
Apr 7, 2016
3 min read

Updated: Dec 13, 2025

Grants are key sources of funding, and you should write them. However, in this video, learn an important principle that highlights why donors can be so much more valuable than grants.

Why donors are better than grants

Let me start with a question that seems obvious on the surface:

If raising money from donors is one of your income channels, you’d want more donors… right?

Yes—but not just for the reason you think.

Hold that thought for a moment. Let’s take a quick detour.

The Hidden Limitations of Grant Funding

Do you write grants to raise money? Most nonprofits do—and they should.

Grants can be a valuable source of funding. But they come with real limitations:

Most grant funding lasts only 1–2 years
Grants require a huge investment of time and energy to write and manage
There’s often disappointment after weeks of work when a grant doesn’t get funded

Grants are helpful—but they are rarely sustainable on their own.

Now, let’s come back to donors.

Why Donors Matter More Than Money

Do you know why I love raising money from donors?

Because donors provide far more than cash.

Donors can also bring:

Time – volunteering to support programs
Expertise – improving operations, strategy, and systems
Influence – opening doors and making key community connections
Advocacy – serving as mission ambassadors in the community
Energy – igniting passion and generosity that inspires others

No grant can do all of that.

The Long-Term Power of Donor Relationships

Here’s another key difference between donors and grants:

If a donor becomes passionate about your mission, they may:

Give for 5, 10, or even 20 years
Increase their giving over time
Make an estate or legacy gift that supports your organization for decades

That’s a far cry from a one-year—or one-and-done—grant.

This is the point most nonprofit leaders miss.

Why More Donors Means More Resources

The real reason you want to continually find and retain more donors—from $50 donors to $50,000 donors—isn’t just to raise more money.

It’s to create more resources for your nonprofit.

More donors mean:

More relationships
More skills
More influence
More sustainability
More long-term impact

This insight fundamentally changed how I ran my first nonprofit—and it became one of the core principles that helped me build a series of gold-standard organizations.

What It Takes to Build a Standout Nonprofit

If you want to:

Build a high-performance nonprofit
Raise more money
Increase your organization’s impact

Then you must commit to:

Finding donors of all sizes
Engaging them meaningfully
Retaining them through exceptional donor stewardship
Treating them like partners, not transactions

Is that a tall order? Absolutely.

But it’s also the path to long-term success.

Key Takeaways

Grants are helpful but limited
Donors provide far more than money
Long-term donor relationships create sustainability
More donors = more resources
More resources = more impact

Summary

Donors are better than grants! . . .

When you invest in building and retaining donors, you’re not just increasing revenue—you’re building the foundation for long-term success.

More donors lead to more access.More access leads to more impact.And yes, along the way, you’ll probably raise more money than you ever imagined.

Tom Iselin

Rated One of America’s Best Board Retreat

and Strategic Planning Facilitators

About the Author

Tom Iselin is recognized as one of America’s leading authorities on high-performance nonprofits. He has built nine sector-leading nonprofits and two software companies, written six books, sits on multiple boards, and has been rated one of America’s Best Board Retreat and Strategic Planning Facilitators. His work on nonprofit strategy, board leadership, and culture has been featured on CNN, Nightline, and in Newsweek.

Tom is the president of First Things First, a firm specializing in board retreats, strategic planning services, fundraising strategy, and executive coaching for nonprofit CEOs.

Board Retreats & Strategic Planning

If you’re looking for a board retreat facilitator or strategic planning facilitator who has been in the trenches and understands real-world nonprofit challenges, Tom can help your board gain clarity, build alignment, and create an actionable plan that improves performance and impact. His sessions propel organizations to the next level of performance and impact . . . and they're fun!

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