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Raising Resources, overview of sustainability strategies for grass roots nonprofits

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  1. 1. Raising Resources A More-Than-Fundraising Workshop Handbook A Project of the Empowerment Resource Network Where Do We Begin? Nonprofit Primer Fundraising Basics The Art of Asking Reacting to the Answer Alternative Resources Cultivating Donors Resources
  2. 2. Where Do We Begin? Overview Fund Raising versus Resource Raising You can use a hammer to build a structure, but its uses are limited. It makes a lousy screwdriver and I've never been successful cutting wood with one. Different tools for different jobs . . . . a series of jobs to complete a structure. Building or raising resources for an organization is no different. Grant writing is only one way to get support; it is only one tool. During this workshop we will give you an entire box of different tools, and will teach you how and when to use them. Let’s begin by briefly discussing some nonprofit basics. Nonprofit Primer What is a Nonprofit Organization? An organization formed, not for the purpose of making a profit, but rather for any charitable, civic, community welfare, religious or scientific purpose. They exist to serve a purpose of pubic or mutual benefit. The full Handbook goes into a bit more detail about how to establish a nonprofit organization. To learn more about State Incorporation, Board of Directors, and Bylaws, go to the Foundation Center’s website at www.fdncenter.org. It’s also a good idea to check first with your Secretary of State’s office – they’ll have the latest information on what you need for your particular state. Staffing: What your staff looks like depends on what you do. Some organizations survive with just a director, administrator and volunteers; other organizations have paid positions for everything from basic administration to programs and communications. Almost all community and faith-based organizations depend heavily on volunteers to accomplish their missions. The most successful staff members:  are believers and not just employees or volunteers.  are involved in refining the organization’s strategic plan.  take responsibility for their portion of the budget, controlling spending and looking for new revenues or donors.  take ownership of the organization’s mission and activities. Like staffing, programs are a function of the organization’s strategic plan. They are developed to serve a specific need in keeping with the organization’s mission. The most successful programs:  directly support the organization’s short and long range goals.  have measurable outcomes and established evaluation criteria.  have detailed budgets and personnel requirements.  are not created to take advantage of funding opportunities.  do not compete with existing programs of other organizations unless there is a valid reason. 1
  3. 3. Now that we have reviewed some of the basics of operating like a bona fide nonprofit organization, let’s get to the heart of our needs- Raising resources to support our work. Before we determine how to raise resources, we need to discuss what resources we need and why we need them. It all begins with a quot;planquot; and that plan depends on your mission. Mission Statements A mission statement is a concise statement of a TASK and a PURPOSE for the organization. It provides focus, clarifies meaning and describes what your organization stands for. It says quot;this is what we do or intend to doquot;. Every action the organization takes should help it achieve its mission. A GOOD mission statement: Tells what you do and why you do it.  Is no longer than three to four sentences.  Is rooted in reality.  Is motivational and passionate.  Makes what you are doing believable and important.  Deals with growth issues.  Is an evolving document.  Expresses a shared vision.  No quot;TASKquot; If you do not have a mission statement or need to review yours, follow these five steps: Step 1: Survey the Landscape. Ask others in the community these questions: Are there other organizations in our community that are doing what we do? What do we know about their work? How is what we do a compliment or competition to other groups? Survey the community (civic clubs, churches, government, media, clients etc.) to determine the needs for our service. Step 2: Define the Need. Based upon your survey, identify the actions that could be taken to address the total need for your product or service. Step 3: Identify your niche. Identify the possible actions your organization could take to meet the need for your service. Keep in mind what makes you and your service unique. Step 4: Formulate/Update your mission. Having identified your unique niche and surveyed the need, formulate a clear, concise, measurable and bold Mission Statement. Step 5: Adopt the Mission. The Board formally adopts the Mission. Publicize the Mission to your constituency and the community. A Mission statement is the end destination for your organization. But how do you get there? The quot;mapquot; to reach your destination is the Strategic Plan. 2
  4. 4. Strategic Planning Process The overall Strategic Plan for your organization describes the objectives you need to achieve in order to fulfill your mission. It also outlines what activities or programs you will undertake to accomplish those objectives. Most organizations develop short and long range strategic plans. Short-range plans are normally drafted on an annual basis. Long-range plans are usually three to five years into the future. The four main components of a Strategic Plan are: 1. Mission Statement 2. Major Goals (the 5 or 6 steps needed to accomplish the Mission) - Services - Products - Marketing - Financing 3. Objectives (the incremental steps to achieving your objectives) 4. Strategies and Tactics (specific activities and programs employed to meet each objective, include timeframes, key resources, outcomes and how you will measure success. It is the workplan to achieve each goal.) Goal: Objective Activity Outcome Assessment Completing a table like the one above for each of your goals is a great way to help clarify what activity supports what portion of your mission. You can also detect some programs and activities that have nothing to do with your stated mission – maybe those activities need to go away……….. A strategic plan is essential to the efficiency of any organization. It tells us quot;who, what, when and howquot; we are going to accomplish our mission. Just like a map of Chicago won't help you get to Yankee Stadium in New York, a strategic plan unrelated to your mission is worthless. 1+1=3 Budgets A budget is a plan for getting and spending money to reach specific goals by a certain time. The key word is quot;planquot;. A budget is only as good as the information, time and effort put into it. Because none of us can predict the future, budgets must change or evolve with each situation. Steps to create a Program Budget: 1. Based on the Strategic Plan for each program or goal, identify all of the resources needed to accomplish the workplan. Specify by line-item the people, equipment and things needed. 3
  5. 5. Include all associated personnel costs (salaries, benefits, withholdings). Include overhead costs as a portion of program cost. 2. Determine the costs of all listed resources. Identify in-kind contributions or other ways to reduce funding requirements. Make sure to include justification or cost documentation. 3. Determine any income from the program (service fees, grants, in-kind donations) and when those resources will be available. 4. Using your Strategic Plan timeline, plot expenses and income on a calendar to track anticipated cash flow. Components of a Program Budget EXPENSES Personnel: (Include the number and title of position, percentage of time dedicated to the program and annual salary) Fringe Benefits: (FICA, Workman's Comp etc. - average 18 - 25% of salary) Consultants and Contracted Services: (Contract amount, hourly/daily rate) Specific Program Costs: (Materials, supplies, services) Phone/postage/utilities: Identified as rate per month or % of total Admin, travel, professional publications Other INCOME: Anticipated Donations Service Fees In-Kind Donations Plot line item income and expenses on the calendar to determine cash flow for this program. It tells us when funds are needed and allows us to manage our fundraising efforts to maximize efficiency. It would be foolish to host our major fund-raising dinner in October if we need most of our funds in June. The Cash Flow Report directs your fundraising plan. Combining program budgets (to include your administrative budget) will give you a TOTAL BUDGET for expenses and known income for the coming year. Fundraising Basics Sources and Types of Support Not only do you need to determine who can support you, but also how they can support you. Remember that development is more than just raising funds. Let's examine the various sources of support, the types of resources they can provide, and when they should be considered as potential donors. Private Foundations Corporations Businesses and Associations Major Donors Individuals Government 4
  6. 6. Finding Prospects The only way to find prospective donors is to look for them. That means knowing where to go and what to look for. That means RESEARCH. A good Prospect Worksheet – sample available at www.fdncenter.org. Foundations 1. Foundation Directory, online or at the local library (Parts 1 and 2). 2. Directory for Giving for your particular state 3. Call each prospective foundation and request a copy of their annual report or published grant guidelines. If there are no printed guidelines, ask them to describe the application procedure. 4. Use the internet to research each foundation to get as much information as possible. The Foundation Center has links to some of the best directories and even to some foundation websites. www.fdncentr.org. Also check the Council on Foundations at www.cof.org. 5. Select those prospects whose interests match your organization's goals and programs, and whose level matches your need. 6. Note deadlines and procedures 7. Call the prospective foundation 8. Arrange prospect worksheets by when proposals are due and use information in your finance plan. Prepare a proposal according to guidelines. Corporations 1. Foundation Directory and corporate giving Directory 2. Standard & Poor's Register of Corporations, Directors and Executives; Area Business Almanacs; Business Directories 3. Call each prospective corporation 4. Use the internet to research 5. Select those prospects Note deadlines and procedures 7. Arrange prospect worksheets by when proposals are due and use information in your finance plan. Prepare a proposal according to guidelines. Businesses and Associations 1. Look at the annual reports, brochures, and event notices 2. Banks, telecommunications companies, cable companies, and many retailers will sponsor events in exchange for goodwill advertising. 3. The only real way to know if a business or association is a prospective donor is to call them. 4. Create a prospect worksheet on each business or association. A form similar to the one used for foundations and corporations is fine. Major Donors 1. Current and former board members are your first prospects for major donors. 2. Current and past donors are the next prospective major donors. 3. Look at annual reports, programs and brochures of other nonprofit organizations in your community. 5
  7. 7. Individuals 1. Current and past donors are your best prospects for continued support. 2. Word of mouth is still one of the best tools in expanding support for your cause. 3. Check programs and brochures of other nonprofit to see who supports them. 4. Any time your organization hosts an event, there should be some way to capture information 5. Lists. Developing a Finance Plan We can combine our Strategic Plan, expense Budget and donor prospect worksheets to develop a Finance Plan for the organization. The finance plan outlines how we are going to raise the resources we need to accomplish our Strategic Plan. The key factor in developing the Finance Plan is TIME. When we need the resources determines which prospects we approach for support. Remember some grants and corporate contributions can take months to process. Many individuals or major donors can provide funds in a very short time. It is also wise to diversify your funding sources. Nonprofit organizations are allowed to conduct activities not directly related to its mission as long as those activities do not constitute more than 50% of the organization's total activities. For example, research organizations sell their studies to offset costs; Girl Scouts sell cookies; cultural centers or theaters sell ad space in event programs; Goodwill runs thrift stores. There are alternative ways to raise money using the good old free enterprise system. Supplemental Income Many nonprofit organizations raise supplemental income by selling goods and services. There are professional companies that specialize in providing products for nonprofit fundraising. Some of them are listed in the Resource Section of this Workbook. The basic principle when it comes to a product is to sell something for more than you paid to get it (buy wholesale, sell retail). For a service, you rely heavily on volunteer labor. For any of these events, keep track of your quot;customersquot;. They are now potential donors! A good mix of fundraising activities not only provides revenue for the organization, but it also helps you to expand your donor base and market your organization. Providing goods and services allows you to reach people who may not normally support your organization. Of course you need to ensure that the activity or service is not at odds with your mission. An organization providing drug and alcohol counseling should probably not host an Oktoberfest featuring free beer. Churches may not want to conduct a casino night if their constituency is strongly against gambling. 6
  8. 8. Developing the Case You have now completed the planning, budgeting and research activities for your organization. When we put all of this information together, it forms what is known as our Case for Support. Your Case provides all of the information a potential donor would need to make a decision regarding a donation; it cites the reasons an investor would invest. The Case is the primary document on which your organization bases support. Information from the case will be used for grant proposals, fundraising letters, meetings with donors and every other resource-raising activity you conduct. Pulling all of this information together before you try to raise money or resources will save you time and effort in the long run. A Case consists of 12 major elements: 1. Description of the need for the organization. Why do you exist? (Mission) 2. Description of services/activities to meet the need (current and future). (Strategic Plan) 3. Description of the population served to include number. 4. Description of uniqueness, distinctiveness. Others doing similar work, complementary work, and why we are best positioned. 5. History of the organization. 6. Current Budget to include cost analysis by program/project. 7. Size and type of fundraising goals. (Summary of Finance Plan) 8. Description of Board and volunteers 9. Organizational structure and roles of staff 10. Financial Statements 11. Vision for the Future 12. Talking Points - Answers to anticipated questions. The Case for Support outlines: what we need; why we need it; where and how we will get it; and why someone should provide it. The Art of Asking Believe it or not, one of the most common reasons people do not support a nonprofit organization is . . . NO ONE ASKED. Never assume someone knows what you need. Present your case and ask for something specific. Fundraising Letters 1. Personalized Salutation 2. Provocative Opening 3. Ask for the gift early and often. 4. Tell what the gift will accomplish. 5. Inform the prospect. 6. Write with a sense of urgency. 7. Describe what the donor gets in return for support. 8. Be personal. 9. Show appreciation. 10. Make it easy to give. 7
  9. 9. Individual Solicitation 1. Getting the Appointment 2. Prepare a script for the meeting. Why are you here? What did you do with my last gift? How long will this take? Do you even know I've made a gift? Is this really important? How efficient are you? How successful are you? (Are you the best?) How do you achieve your mission? Who are you-do we have anything in common? Who else that I know supports you? How much do you want from me? How much have they given? How will you use my gift? Where are you from? How do I know you will do what you say? Where is your office? How many staff? How can I make a difference as just one person How will I be recognized or thanked for my gift? Who that I know will know about my gift and thank me? 3. Solicit the support. Break the ice in the first 5 minutes. Discuss previous support and what it accomplished; discuss hobbies, interests or  things in common. LISTEN for interests and initial objections.  Describe the quot;big picturequot; in 3 to 5 minutes. Tell stories that describe the need for your organization and project.  LISTEN to response and watch for nonverbal cues.  Zero in on the specific reason for the visit. Should take 10 to 15 minutes. Show pictures, diagrams; sell your project or  program; describe the benefits. LISTEN to response; answer questions.  Use a gift chart to request a specific amount or a diagram to solicit volunteer involvement. An example of a donor  pyramid and a fundraising plan are on the following pages. LISTEN  Overcome objectives and negotiate the specific gift (15 to 30 minutes). quot;We need to raise $_____. Would you consider  a gift of $_____?quot; Move down the pyramid as needed. Consider multi-year pledges, gifts of stock, in-kind donations of materials or services. If they can not donate, would they host an event to help raise the money? How can they get involved? LISTEN  Determine the next steps (follow-up, more information).  LISTEN  4. Follow-up Grant Proposals Introduction  State the purpose of the proposal and refer to any conversations or meetings with staff or trustees. Describe the Program  Mission Statement  Describe the project.  Tell how the project supports the mission. Describe HOW you will Conduct the Program  Use language from Strategic Plan  Include timelines Describe Why you can do the Job  Respond to feedback from earlier conversation Describe Resources Needed  Personnel  Equipment  Financial Describe Resource-Raising Plan 8
  10. 10.  Where will the money come from?  Whom have you approached and who is currently providing support?  What will happen if you do not raise all needed resources? ASK FOR THE MONEY Include necessary Attachments  Project Budget  IRS Letter  Board List  Brochure/website address Reacting to the Answer When Does quot;NOquot; Mean quot;NEVERquot; If the response is anything but quot;Neverquot;, conduct more research on the prospective donor and continually gather information about their interests and donor trends. Review prospect files periodically for future funding strategies. quot;YESquot; is Just the Beginning 1. Immediately CALL the donor to thank them for their gift. 2. Send a formal acknowledgement to the donor. 3. Mark your calendar to indicate dates for formal reports to donors. At a minimum, a final report should be issued when project is completed. 4. Update your budget to reflect commitment of funds. 5. Send newsletters, reports and invitations to events to keep donors active. 6. Plan to approach the donor to support future programs. Donor Research is an ongoing activity. Alternative Resources Rather than providing a cash donation, many donors may be in a position to contribute materials or services to your organization. These gifts are called quot;IN-KINDquot; and are handled on your budget sheet as if you received the money for the item or service. The value of the donation is either 1) the fair market value for an item, or 2) the purchase price of the item (for a retailer), or 3) the market value for the service performed. The IRS has some guidelines on their website for how to “value” in-kind donations (www.irs.gov). Finding alternative resources can: Reduce existing expenses Allow you to leverage one resource or idea to support another Reduce overall costs by using Volunteers for most of the work 9
  11. 11. Strategic Partnerships: There will be times when, despite your best efforts and hard work, a project or plan just won’t work out – the resources just aren’t there. Before you abandon an important program or project, consider if another nonprofit organization could help you out. A Strategic Partnership is formed when two organizations come together to accomplish a specific goal. They agree on the purpose, goals, objectives and resources needed for the project and also agree on who will do what to get the job done. Cultivating Donors Marketing and Media – Develop a public relations plan that includes a media kit, opportunities to promote your organization and planned media coverage of your activities and events. Special Events – sometimes, special events are held just to involve new donors and to gain media attention. Plan to host at least one special event each year where you can invite the media and general public to attend. Standards and Accountability Unlike the private sector, the “bottom line” isn’t truly the bottom line for nonprofits. They exist to do good in the community, not to make money. It can be difficult to figure out the best way to measure how effective we are and if we are following what could be called “best practices”. The best place to start is with your own state nonprofit association to see if they have published standards. The best, all encompassing standards were developed by The Maryland Association of Nonprofit Organizations. Their Standards for Excellence program is based on honesty, integrity, fairness, respect, trust, responsibility, and accountability in nonprofit program operations, governance, human resources, financial management and fundraising. The Standards cover a broad range of topics from Board operations, to budget and finance, from fundraising to conflicts of interest. A total of 55 performance standards are outlined for nonprofits to follow. What do we mean when we say Accountability? In the nonprofit sector, organizations are accountable to different audiences for different reasons. The best summary of what it means to be an accountable organization comes from the Association of Fundraising Professionals and can be found on their website at www.fdncenter.org. The foundation for the nonprofit sector is “public trust”. Any time a nonprofit violates that trust, it makes it more difficult for the rest of us to operate. Resources Full version of the Raising Resources handbook contains a great list of resources for everything from nonprofit issues to grant writing and event coordination. Also, check out the resources provided at the Center for Effective Compassion’s website at www.acton.org/cec/resource.html. 10