By Jason Saul (IL ’89)

The primary sources of revenue for nonprofits are all in irreversible decline: The federal government is broke, states are running budget deficits that total $140-billion, the charitable tax deduction is in jeopardy, and giving has seen the deepest declines ever recorded.  The Chronicle of Philanthropy reported in its Philanthropy 400 in October, donations to the nation’s biggest charities dropped 11 percent last year. What’s more, contributions to foundations fell 8 percent in 2009, following an almost 20 percent drop the year before.

Truman Scholars working in the nonprofit sector, I challenge you to think about how we might address this issue. Here’s what I think:

We are facing the end of fundraising. Lobbying harder and asking for larger donations will not cut it any more. I offer that perhaps the reason that all seems like too much of a struggle for too little money is that we’re focusing on seeking money from the wrong places and in the wrong way.

For too long in the world of philanthropy, there has been a substantial disconnect between supply and demand. Nonprofits “supply” social impact (research, services, advocacy, etc.), but the “consumers” of that impact (the beneficiaries) are often the least able to pay. As a result, foundations, donors, and governments are the ones that set the demand for these services, using their best judgment to choose which organizations should get financed and which should not.

Consumers spend $227-billion annually for goods and services related to health, the environment, social justice, and sustainable living. Corporations spend billions on environmental sustainability, social responsibility, and volunteerism and other efforts to keep employees loyal and motivated. Governments spend more than ever on education and health care results not just because they are social entitlements but also because they affect our nation’s economic competitiveness. Investors have allocated $2.71-trillion to socially screened mutual funds, pensions, and other impact investments. Those dollars mean there’s no reason to focus just on the $300-billion in charitable contributions but to look at the quest for money in a whole new way.

The fact is that today social change is no longer something that operates outside of the economy. As a result, neither do nonprofits.

In my latest book, The End of Fundraising, I help nonprofits figure out how to capture, market, and sell “high value” outcomes—the outcomes most relevant to actually solving social problems.

I submit that to solve social problems, nonprofits must take more entrepreneurial, innovative, and systemic approaches to their work. This means that groups can’t just keep doing what they are doing and hope that someone will finance it.

If people are really “buying impact,” not just giving money to programs, then nonprofits need to devise better strategies to produce those results. That requires a whole new toolkit: public-private partnerships, new technologies, new incentives, and cutting-edge approaches to creating change.

It’s time for all of us to think about new ways to forge social outcomes into economic currency. It is time for the nonprofit world to tap into the engine of the economy, not just the fumes.

Jason Saul (IL ’89) is the author of The End of Fundraising, published this month by Jossey-Bass. He is chief executive of Mission Measurement, a Chicago consulting company that helps nonprofits, corporations, and government agencies figure out whether they are making a difference to society. He is also the founder of the nonprofit Center for What Works.