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Financing Not Fundraising: The Plan

By Nell Edgington



A few months ago I argued that nonprofits need to stop fundraising and start financing for social impact. As I wrote:

Fundraising in its current form just doesn’t work anymore.  Indeed, traditional fundraising is holding the sector back by keeping nonprofits in the starvation cycle of trying to do more and more with less and less. Really, what the sector needs is a financing strategy, not a fundraising strategy.  By that I mean that nonprofits have to break out of the narrow view that traditional FUNDRAISING (individual donor appeals, events, foundation grants) will completely fund all of their activities.  Instead, nonprofits must work to create a broader approach to securing the overall FINANCING necessary to create social change.

The idea is that nonprofits can no longer work towards social impact on one side and throw a gala event (or send out a direct mail appeal or write a grant) on the other side and think that this disjointed, haphazard way of funding their work is sustainable. To truly achieve social impact, nonprofits need to take a huge step back and figure out how to employ all of the financial tools available to them in an effective, integrated way.  This is how you finance, rather than fundraise for, social impact.

Over the next few months, in an occasional series titled Financing Not Fundraising, I will elaborate on this argument and demonstrate what financing, as opposed to fundraising, for social impact looks like.

Today I will launch the series with the core element of the idea, which is a financial plan. In essence, a financial plan is a key element of, not separate from, a nonprofit’s strategic plan. That means that the goals of the strategic plan are created with the full knowledge of 1) what it will cost to reach those goals and 2) how the money to cover those costs will be secured.

A financial plan differs from a fundraising plan in a number of ways. A financial plan, unlike a fundraising plan:

  • Includes ALL activities that bring money in the door (individual donors, foundation grants, earned income, corporate sponsorships, government contracts, loans, etc.) and fully integrates them into an overall strategy and execution plan.
  • Supports the short AND long term goals of the organization
  • Funds the programs AND infrastructure of the organization. It recognizes the necessity of and supports not only the nonprofit’s direct service activities, but also, the infrastructure, systems, planning and other organization building that will ensure that those services thrive and grow
  • Understands the characteristics and uses of different kinds of money (i.e. revenue versus growth capital, loans versus grants) and employs each available financial vehicle in the most effective way
  • Employs money-securing activities that are in line with, not opposed to, the core competencies of the organization

If you are interested in having Social Velocity help you create such a plan, check out our Financing Plan consulting service, or if you’d rather create it on your own with our tool, check out our Financing Plan Step-by-Step Guide.

What I am suggesting is that nonprofits stop exhausting their boards, staffs, donors, friends, and clients with a series of disjointed activities that are meant to raise money, but actually just end up making poor use of a nonprofit’s already limited resources. Instead, nonprofits need an integrated, thoughtful, strategic financing plan that makes social impact a reality.

If you want to learn more about applying the concepts of Financing Not Fundraising to your nonprofit, check out our Financing Not Fundraising Webinar Series, or download the 27-page Financing Not Fundraising e-book.

Photo Credit: Steve Wampler


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About the Author: Nell Edgington is President of Social Velocity (www.socialvelocity.net), a management consulting firm leading nonprofits to greater social impact and financial sustainability. Social Velocity helps nonprofits grow their programs, bring more money in the door, and use resources more effectively. For more information, check out Social Velocity consulting services and clients.


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6 Comments to Financing Not Fundraising: The Plan

[...] This post was mentioned on Twitter by Nell Edgington, Michael Chatman. Michael Chatman said: RT @nedgington: #Nonprofits need to stop #fundraising and start financing social impact. Step 1 is a financial plan: http://bit.ly/9Bijio [...]

Martin Montero
May 11, 2010

Great post, great points! One more very powerful tool is corporate partners instead of corp sponsors. The Manchester Bidwell (http://www.manchesterbidwell.org)/Bayer Corp is a prime case study on this. This video of the founder details it well. http://www.youtube.com/watch?v=E_lSduJYbLo

Halcyone
January 3, 2011

I am all over this. Particularly for the arts, I am looking for a different model entirely. We have gotten so immersed in red tape there is little ability to create. Partnership, not handouts. Artists have to bring themselves (ourselves) to the biz conversation. Thanks for your insights!

Nell Edgington
January 3, 2011

Halcyone, I agree with you, I think the arts are particularly ripe for this new approach to funding. Thanks!

[...] Financing Not Fundraising: The Plan [...]

Nathalie Tedder
February 8, 2012

Thank you! Very informative and timely. I like the fresh angle – you have got us thinking!

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