By Alex Davis
Southern Tier Communications Strategies, LLC
How would you classify your nonprofit organization? And think of the others around you. You have your charitable organizations, community do-gooders, churches, or perhaps something altogether different with tax-exempt status. What’s their common bond? They all require a strong nonprofit fundraising plan to build (and sustain) their vital community missions.
Every nonprofit must fundraise. They typically realize revenues through individual giving (donations), foundation funding (grants), corporate contributions, special events and government contracts – or some combination.
To have a strong nonprofit fundraising strategy – and increase cash flow toward your goals – you must truly understand the variety of funding sources available.
Let’s Build a Strong Nonprofit Fundraising Plan – Understanding of What’s Out There
What’s out there? A lot. Although they may not all be applicable to your nonprofit’s needs (or more importantly to the communities you serve). So let’s break these options down to understand what they are, what they require, and the likelihood for success for each.
Individual Gifts and Donations
Think about all the commercials out there soliciting donations for a good cause. (Yes, we’re thinking of the Sarah McLachlan sad puppy ads that tug on your heartstrings.) They’re effective. They make you (an individual) want to take action – to help.
Of all the types, the most fundraising revenue comes from individuals. It’s the biggest piece of the fundraising pie, at 77 percent of total annual giving worldwide. Individual gifts – large and small – add up to a MASSIVE amount of nonprofit support. The avenues for donations are too numerous to mention, but some popular options include:
- Facebook fundraisers
- Golf tournaments/challenges
- Kettle drives outside your local supermarket
- Relationships wealthy benefactors
So let’s tap into that wellspring.
First, you must have a donor recruitment plan that lays out how you will appeal to new donors. You must also have a donor retention plan to keep their individual contributions flowing. (Helpful hint: It’s far more expensive to find new donors than to keep old ones.)
Training is key for those in your organization tasked with securing individual donations. They’re the stewards of your community message, as they directly interact with givers who can just as easily say “no” as they can “yes.” Words have power. Your fundraising staff must wield them effectively to secure those donations.
There are other components of securing individual gifts that must not be ignored. Nearly a quarter way through the 21st century, your nonprofit’s digital presence is more important than ever. It must be a mechanism to educate, inspire and accept donations. A well-rounded and well-oiled digital presence includes your:
- Social media
- Email marketing/newsletters
- Quarterly/annual reports
And so much more – all available with a simple click! Individual donors give to causes that mean something to them. Give them all the tools and resources to CHOOSE YOUR CAUSE.
This also takes some research. How do individuals among your target audience(s) think? Which activities do they prioritize for their hard-earned money? You must have a vehicle to:
- Record the research
- Recruit and nurture donors
- Manage donor communications (track responses/interactions, answer questions, accept feedback)
- Receive/record donations
- Write thank-you letters (and report the use of their gift)
- And even refund donations, if requested
Foundations & Other Grantmakers
Foundations are also HUGE givers, coming in at 18 percent of all nonprofit fundraising annually. The strongest nonprofit fundraising strategies heavily prioritize grant writing – because grants often total thousands to millions of dollars in support.
To get started in grant writing, your nonprofit needs a tool to research potential funders. We particularly like the Grant Professionals Association and GrantStation as a comprehensive funder database. This allows nonprofits to zero in on the kind of foundations that exist, which in turn, helps to further:
Once you’ve identified likely funding sources, it’s helpful to build a grants calendar to organize when proposals are due and to assign tasks and deadlines en route to submission.
Similarly to individual donors, foundations and other grant funders like to be acknowledged and appreciated for their contributions. Your nonprofit must be able to:
- Record grants received
- Track grant performance
- Answer funder questions/submit required follow-up reports
- Facilitate and record funder communications
- Complete required media/PR/community outreach obligations
- Write thank you letters
Having savings and organizational capacity are critical, too, as many grants require a match as “skin in the game.” This could include cash, in-kind (project implementation), and third-party contributions, among others.
Business & Corporate Giving
The corporate world contributes 5 percent of charitable giving. A slice of the pie that small may not seem like much, but the fundraising potential here is also ENORMOUS.
Businesses and corporations may have established nonprofit partners, employee match giving programs, challenge grants, sponsorships and other avenues for community investment. This provides benefits beyond the obvious tax breaks:
- Improving host communities
- Supporting economic development
- Influencing socioeconomic change
Which, in turn, help businesses in areas like positive public relations and creating/nurturing an environment for success – aka profits. (Not to mention all the free advertising.)
Business donations also require a robust fundraising infrastructure for your nonprofit to track everything related to donors and priorities. You should have financial statements, audits and reports readily available for review. Create sponsorship templates and other documentation to highlight the positive impacts of business donations.
Special Fundraising Events
While fundraising events are nice for fellowship and fun, a word of caution: this element of a nonprofit fundraising strategy often brings a low return of investment.
Why? Because they’re so expensive to set up. You may get a ballroom full of 500 or more business leaders, nonprofit philanthropists and other community leaders who are absolutely in love with your mission. But the sheer expense of serving filet mignon on fine china will quickly chew into the event’s net revenue.
Generally, organizing and hosting a special event costs 50 cents for every dollar raised – not including labor (which is huge) and administrative costs. And first-time donors are unlikely to become repeat donors.
But special events are great for “friendraising.” Even if you’re not netting a ton of donations to support your mission, you may certainly raise mission awareness and evangelists for your cause. Friendraising almost always nurtures both new and repeat donors.
This kind of fundraising is at the whims of the governmental budgeting process. And we’re talking governments at all levels – with committees and lobbyists and a million other factors beyond your control. As is often the case, if funding is secured, delays can be expected. And from one budget to the next, your nonprofit could experience funding cuts (with little or no notice).
Is it a gamble to put so much time, energy and resources into applying for government grants and contracts? Sure. But this funding source shouldn’t be overlooked as a potential player in your nonprofit fundraising plan.
Government projects don’t fool around. Application processes are lengthy and onerous – whether they’re from the US Department of Health and Human Services or a county-level microenterprise grant process. They’re competitive. They’re highly specific. They’re riddled with oversight and regulation.
But, done right, they can be incredibly worth it. Be sure to know all requirements for applying, operating the program, reporting program results and financial disclosures. Matching requirements from these sources are also common.
Understanding Funding Sources for a Strong Nonprofit Fundraising Plan
We’ve covered a lot here. There are a lot of options for a well-rounded nonprofit fundraising plan. Don’t put all your eggs in one basket. Choose the fundraising strategies that work best for your needs.
And always remember the ultimate litmus test: return on investment. A fundraising strategy is an investment. It will cost money. Your task is to choose the fundraising activities that bring the greatest ROI. If you need help, an expert consultant will point your organization in the right direction.