As more charities develop business ventures to further their missions and generate revenue, a series of challenges is erupting both for organizations and for fund raisers, according to a panel of fund-raising consultants who met in Baltimore just before the Association of Fundraising Professionals opened its annual meeting.

Charities that are successful at raising money through social entrepreneurship may have a harder time making a case to donors that they still need to provide support, noted Kristina Carlson, president of Ketchum, a Pursuant Company, in Dallas. She spoke about a charity she has worked with that had gone public with a business venture, raising $300-million in an initial stock offering. “Their major-gifts officer quit,” she said.

On the other hand, the opportunity to invest in certain business ventures by nonprofit organizations—such as helping to bring new drugs or medical treatments to market—can spark supporters' imagination, said Peter J. Fissinger, president of Campbell & Company, in Chicago. “Donors are very interested in contributing to future of our economy.”

But as with for-profit entrepreneurs, business ventures always carry risk, as audience member Henry (Hank) Goldstein, a partner in the Oram Group, in New York, noted. “You have an inalienable right to go broke,” he said. “Just because your heart is pure and your motivation sincere, doesn't mean you won't fail.”

The panel was moderated by Holly Hall, a Chronicle features editor, and sponsored by the Giving Institute and Giving USA Foundation.

Technology’s Limits

Speakers also debated the role of technology and data analysis in modern-day fund raising. Some panel members said that too many fund raisers are leaning too heavily on those tools at the expense of face time with supporters. Ideally, fund raisers should spend 70 percent of their time with potential donors, says Keith Curtis, founder of the Curtis Group, in Virginia Beach, Va.

“If they're just sitting in their office looking at things, either they're not going to have a job, or the nonprofit isn’t going to last,” said Mr. Curtis.

While charities’ efforts to raise money from social networks like Facebook have thus far not lived up to the hype, Ms. Carlson said that nonprofit groups should still look to such outlets as a way to prove broad support for their causes to donors, many of whom are “obsessed” with the wonders of Web 2.0.

“How many of you have been in a meeting with a major donor who asked, ‘What are we going to do about Twitter? What’s our social-media strategy?” she asked.

Having a robust presence online, she said, allows charities to go back to those same donors and say, “Look, we have this online community, there are all these young people who care about this cause, we just need your money to take it to the next level.”