What are the Best Ways to Fund a Non-Profit Organization?

By missioncontrol | 0 comments

Most nonprofits in the USA get the majority of their funding from individual donors, so start here. If you’ve got a nice focused goal, you should be able to identify who will benefit from you achieving it. If you’re removing chemicals in a lake, then who lives near the lake?  Who wants to fish or swim in the river? Are there current or prospective tourist operators who would benefit? Meet folks, pitch the idea, get networking. Always be clear on what you want and what you need. “This much much money will help us do X”.

Ask your friends and family for funding, if you can’t convince people who love you that the idea is valuable, you may have a bigger problem. Social media or crowd funding tools can be useful in reaching a wide array of folks but be targeted – but make sure it is clear you know what you need, and what are you asking for. Talk to as many people as you can, ask them to refer you to others. Encourage people to see if their employers have matching donation programs (many do), or grants they can apply for.

Ask for what you want. Don’t make this common mistake. You have a wonderful conversation, the potential donor is excited, but you feel to shy to ask for what you want. The conversation ends with them confused and you empty handed. n Building donor relationships is like dating. It is actually a two-way relationship, and you get more respect if you are clear on your needs, as well as how you can meet the needs of your donor. Remember people like giving and making a difference. It makes them feel good.

Boards. Many people establish and use an advisory or fundraising board as a source of network and donation, this is a legitimate thing to do, and can be very helpful. However — do not ONLY look to your board for fundraising. Build a diverse board with a range of skills and find ways to use all their skills. It is okay to be clear about the ‘give and get’ target, how much a board is expected to give directly or to fund-raise on your behalf.  Note that Registered nonprofits have minimum legal requirements for Boards of Directors.

Events. Many nonprofits rely on events to raise funds (and their profile), typically through tickets sales and sales at the event of things like donated auction items. This can be a very successful approach to expanding your donor base and reach, but it is labor intensive, and in terms of effort/reward ratio, often overrated. For example, people often focus on the total revenue raised by the event, ignoring the costs to host. I advocate pursuing this approach only if you have a lot of organized (and experienced) volunteers who want to run events. The best impact comes when you are really good at following up with people to find ways for them to connect to the organization.

Grants. There are loads of grants with all kinds of organizations–foundation, corporate and government. Most sophisticated nonprofits use a range of software and subscribe to lists that let them know what grants are coming available when. A couple worth considering are the Foundation Center and Grants.gov

Do change what you are doing to chase grants, this quickly leads to mission creep, and a dilution of focus and impact.  Respond to only those that are actually relevant to your mission and organization, though do think creatively about how your goals and approach may meet relevant criteria. Applying for grants is an art form, and there are some great grant writers who work on contract. If you are new to this space, it may be worth hiring one to help you learn the ropes. Always read the whole grant application before you think of applying. If you can, talk to the grantor before you apply. Again, think long-term relationships.

Social Enterprises broadly defined, are ventures that have dual purposes, making a profit in order to support a charitable activity. There are several different models. Some organizations, like Warby Parker, enter partnerships with a nonprofit, and feed a portion of their profits directly to them. So, you can think about if there is a business who has a natural link up with your work as a nonprofit and pursue a partnership. Others pursue a buy-one, give-one model, a model that has some questions hanging over its effectiveness depending on what is being given. If you want to pursue this model, you must be confident that the recipients will genuinely benefit from receiving the product. Others pursue a commercial/nonprofit model, like Paul Neuman’s – profits go to a range of nonprofits. Others have a sideline in commercial products (UNICEF cards) that fund their work. All can be worth considering, but work best when the commercial work either is closely tied to the work at hand, or at arms lengths. You don’t want to be split in two by two competing goals.

Most of all – be focused, do good work, measure your impact, tell your compelling story to everyone, and ask for what you need.

Liana Downey is an experienced management consultant, who has consistently delivered results for clients on critical topics around the world. Liana is an expert advisor to the Australian Department of Prime Minister and Cabinet. Prior to establishing Liana Downey & Associates, she led McKinsey & Company’s Australian government and social-sector practices, and holds an MBA (Public Management) from Stanford University.

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