Developing a diverse funding base

Developing a Diverse Funding Base Presented by Gayle L. Gifford, ACFRE

Objectives for Today
Understand concepts of sustainability, vibrancy and resilience
Identify sources of nonprofit revenues
Understand what you need to do to be successful at securing those revenues
Connect with your colleagues

TOPICS
Sustainability, vibrancy, resilience
Revenue sources, pros and cons
Developing capacity to pursue different funding sources
Other helpful concepts

Working Agreement
This is a taste, not the whole meal
The only stupid question is the one you didn’t ask
Honor newbies and old hands
Respect time
Adjust your environment as you need
Share Hot tips

How does your organization define sustainability ?
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More about sustainability
When funders talk about sustainability, they usually mean
GET MONEY FROM SOMEONE ELSE
There is no sustainable source of funding, every dollar must be re-earned every year.

Substitute Financial Vibrancy
The capacity of an organization to transition from one sustainable moment to the next
Coined by Marilyn Struthers, Ontario Trillium Foundation
What might she mean?

Sustainability, vibrancy, resilience
NEW GOALS:
Ability to change while staying effective and true to mission
Maneuver through instability in an opportunistic and optimistic way.
Fluidity to change organizational shape, build alliances and take up the opportunities of the moment” (m. struthers)

What would resilience look like to you?
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How much do you need?
Total dollars
By category: e.g. membership, grants, government, special events
Restricted vs. unrestricted
Public or private
More or fewer donors?
Larger gifts?
Donors or members?
Cash or inkind?
Money or labor?

What do you need the money for?
Conducting programs
Buying and stewarding properties
People to do things
Maintaining an office
Managing data
Communicating with your constituents
Raising money
Other ____________?

How does your community benefit?
Connect the money you need to the impact you want to have
Help potential donors visualize the change you are trying to create
Tell a powerful story

Why do donors Give?
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Why donors give
To realize some change in the world
To preserve something of value
To feel good
To be recognized, appreciated
To create good will
To realize tax benefit
Because required by law
Someone asked them

Worksheet : Develop your Case for Support
If you had more money, how would you spend it?
In two paragraphs, how does the community benefit if your organization raises this money?
What does your community value?
Be clear, convincing and demonstrate a real , tangible benefit to the community?

Organization perspective:
We need a bigger boat in order for our ocean classrooms program to accommodate more students
Community benefit :
Hundreds of schoolchildren will unlock the wonders of the sea in our ocean classroom and start their journey as livelong stewards of our oceans
Case Example

Designing Growth What are you looking for?

How would you like the money?
Restricted or unrestricted
Public or private
Many donors or few
Individuals or institutions

Six Sources of Revenues
Individuals
Corporations/Businesses
Private Foundations
Government
Fees for goods or services
Income-producing assets, e.g. endowment

Breakdown of nonprofit revenues
38% from Dues, Fees, Charges
31% from Government Sources
20% from Philanthropy (individuals, foundations, businesses)
11% from Other (e.g. interest)
Estimates, from Independent Sector, includes 501(c)3s and 501(c)4s

Individuals
PROS
Largest source of philanthropic dollars
Most unrestricted
Need less evidence and paperwork
Can write a check “today”
High ROI for face to face
Relatively predictable
Loyalty can be very high
CONS
People intensive
Raising small gifts from many donors is time-consuming and expensive
Requires programming of public appeal and engagement
Won’t stay if you don’t engage & appreciate them

Corporations
PROS
Potential for large gifts
Money from lots of pots – charitable, goods and services, royalties, contracts, advertising, sponsorships
Often just people
CONS
Need to align with business interests
Need to engage business leadership
Usually avoid controversy and social advocacy
Smallest source of nonprofit revenues

Grants from Foundations
PROS
Most foundations are families – act like individuals
Relatively high ROI
Potential for large gifts
Seed money for new programming
Sometimes operating support
CONS
“ Outcome” driven
Time and project limited
Usually restricted
Highly competitive
Not for lobbying
Often lots of paperwork

Government
PROS
Same as foundations
2 nd largest source of nonprofit revenues
Can be fee for service
CONS
Same as foundations
Expect high level of sophistication in grant writing
Prohibited from lobbying and sometimes advocacy

Fees for goods and services
PROS
Largest source of US nonprofit revenues
Program contracts often from government
No charitable intent required
CONS
Need to align with mission
May have tax implications
Requires strong business planning and marketing investment
Must be customer driven

Benefiting from the capacity of partners: the seventh revenue source
Space
People
Goods & Services
Expertise
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Worksheet How ready are you?
What is your desired source of revenue?
How ready are you to meet potential donor needs?

Designing Growth Growth Basics

Growth Basics
Stabilize
Keep the donors & customers you already have
Replace the donors you lose
Add
New donors or customers
More dollars per donor

Designing Growth The Gifts Pyramid

How to raise $1 Million 8-10 $425,000 $50,000 2 8-10 $485,000 $30,000 2 16-20 $585,000 $25,000 4 20-25 $645,000 $15,000 5 40-50 $745,000 $10,000 10 40-50 $820,000 $7,500 10 400-500 $1,000,000 $500 110 100-150 $945,000 $1000 25 80-100 $920,000 $5,000 20 4-5 $325,000 $75,000 1 4-5 $250,000 $100,000 1 4-5 $150,000 $150,000 1 Prospects Needed Running Total Size of Gift Number of Gifts

How to raise the next $100,000 Four scenarios
Grassroots: many small givers
Large Gifts : to $10,000
Larger Gifts: up to $25,000
Major Gifts only: $1,000 to $50,000

The next $100,000 if your strategy is… grassroots large gifts (to $10K) 60 $100,000 15 Under $1000 224 $100,00 56 TOTALS 40 $92,400 10 $1,000 28 $82,400 7 $1,500 28 $71,900 7 $2,000 20 $11,500 5 $2,300 20 $46,400 5 $2,800 12 $38,000 3 $3,500 8 $27,500 2 $5,000 4 $17,500 1 $7,500 4 $10,000 1 $10,000 Prospects Running Total # Gifts Range ***** $100,000 1000 $25 5,000+ $100,000 1213 TOTALS **** $75,000 120 $50 120 $69,000 30 $100 120 $66,000 30 $250 60 $58,500 13 $500 40 $52,000 10 $1,000 28 $42,000 7 $1,500 28 $31,500 7 $2,000 12 $17,500 3 $2,500 8 $10,000 2 $5,000 Prospects Running Total # Gifts Range

The next $100,000 if your strategy is… larger gifts (to $25K ) major gifts (to $50K) 40-50 $100,000 10 $1,000 92 to 115 $100,000 23 TOTALS 32-40 $90,000 8 $2,500 16-20 $70,000 4 $5,000 4-5 $50,000 1 $50,000 Prospects Running Total Gifts Range 80-100 $100,000 20 $500 184-230 $100,000 46 TOTALS 40-50 $90,000 10 $1,000 40-50 $80,000 10 $2,500 16-20 $55,000 4 $5,000 4-5 $35,000 1 $10,000 4-5 $25,000 1 $25,000 Prospects Running total Gifts Range

Every prospect needs a name
Example:
Need 5 prospects capable of making a gift at the $5,000 level
Prospects:
Mr. and Mrs. José Rodriguez
Good Cause Foundation
ABC Corporation
Jane Doe
Aunt Harriet

Growing Donors, Members and Foundation Support

Individual Donors or Members
Appreciate the donors you have
Send timely, personal thank you
Give feedback on how their gift is making a difference
Provide appropriate and welcomed recognition
Engage donor heads and hearts
Keep your organization “top of mind”
Create opportunities to get “cold and wet”
Communicate needs and how they can help
Tell compelling stories
Produce results

Remember the four Cs
Connect
Capture
Convert
Communicate

Grant seeking
Build connections and relationships
Know who you are talking to
Cultivate, cultivate
Target communications
Identify donor value
Create newness
new issues into existing program
New audiences
Appeal to donor worldview
Bundle projects for maximum impact
Find hidden value

Grant seeking (continued)
Demonstrate leadership
Know your stuff
Prove it
Be logical
Communicate like a leader
Think ahead
Long range planning
Research funder opportunities
Anticipate problems or trends

Proposal selling points
Speak the same language
Establish compelling needs
Prove it
Focus on results
Reference theory and best practices
Gather strategic endorsements

Fund Development Plan
Case for Support
Individual cases as needed
Target Audiences
Goals and objectives
Prospect research
Strategies in
Cultivation
Solicitation
Stewardship
Donor and gift management
Calendar
Budget
Research and data analysis
Benchmarks
Evaluation
Professional development

Your donor database
Custom-made or Off the Shelf?

Custom Made
Pros
Seems less expensive
Got a volunteer willing to do this
Can design for special needs
Necessary in very specialized situations
Cons
No documentation
Not designed for fundraising
Minimal reporting or analysis
Corrupts over time
Little technical support when you need it

Off the shelf
Pros
Reflects decades of knowledge
Built for raising money
Reports and analysis
May allow events, volunteer, grants management
Lots of price options including no and low-cost, online hosted services
See www.TechSoup.org for volumes of advice and low-cost options
Cons
Requires training
Upfront costs
Annual maintenance fees
Training: time and costs
Multiple user license adds costs
Online hosted services: fees rise with volume
Licensed software: higher start up costs

The answer to How?
is Yes!
With gratitude to Peter Block

Cause & Effect Inc. can help you make a difference in the world by creating the internal change that will strengthen your governance, improve your programming, build stronger relationships with your constituencies, or boost your revenues. We’ll work with you on Board development and training, organizational development, strategic planning, group facilitation, public engagement, program development, organizational communications or fundraising.
Contact us at: 401.331.2272, [email_address] or [email_address]
www.CEffect.com
Gayle L. Gifford, ACFRE or Jonathan W. Howard

Developing a diverse funding base

by Gayle Gifford on Jan 19, 2011

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Developing a diverse funding base — Presentation Transcript