nonprofit fundraising plan
It becomes increasingly obvious to me that the nonprofit sector suffers from a lack of confidence. Centuries of being sidelined as “charities” while the real work of the world (business) took center stage has made the nonprofit sector continually apologize for the work they do and how they do it.
Nowhere is this more true than in the financing of their work.
But for the nonprofit sector to start to demand a seat at the big money table, nonprofits must stop apologizing for needing money. To truly begin to use money as a tool, nonprofit leaders have to stop regretting their need of it and start demanding that they receive enough and the right kinds of money to successfully accomplish their work, which is the topic of today’s installment in the ongoing Financing Not Fundraising series.
Note that this post is included in the recently released Financing Not Fundraising, vol. 3 E-book.
You can’t simply decide to stop feeling bad about asking for money. Instead you have to find the confidence to identify and secure the right financing for your work.
Ask for Change, Not Your Organization
You shouldn’t be asking for money for your organizational needs, rather you should be asking for money as a vehicle to help your organization create social change. Everyone is uncomfortable when asking for a handout. If instead you are asking for resources to make positive social change, which a donor cares about, it is much more powerful, compelling and confidence-inspiring.
Find the Right People
It surely can be awkward asking for money if you are asking the wrong person. Don’t fall into the trap that many nonprofits do by thinking that anyone with money is a potential donor to your nonprofit. People give based on values, therefore you only want to target people for whom your mission and your work resonate deeply. No matter who your target is (an individual, a foundation, a corporation) think about whether they have the Capacity to give at the level you need, have a Connection to someone at your nonprofit, and have a Concern for your nonprofit’s mission. Being strategic about who you are targeting makes you much more confident when you finally make the ask.
Tie Money to Your Goals
If you know as an organization what you are trying to accomplish and how much that will cost, you will have much more confidence asking for money. Instead of just asking for money, you will be asking for the financing necessary to accomplish your strategic goals. If you have a smart organizational strategy you can confidently ask a potential donor to invest in a solid, well-thought out plan for creating change to a problem they care about. And that’s much less awkward than asking someone to just give, right?
Take Out the Middle Man (or Event)
So many nonprofits sidestep the awkwardness of asking for money for their mission by holding a big gala event instead. The thinking is that if they camouflage the ask inside twinkly lights, great music and food, and a loud band that people won’t mind opening their wallets. Aside from the very real fact that you are leaving money on the table, events simply enable the lack of confidence I am describing. Instead of feeling so guilty about asking for money that you run your board and staff ragged by staging a huge event, take out the middle man and identify, cultivate and solicit donors who truly care about your work and will give more significantly through a major donor campaign.
Share Your Results
If your nonprofit is truly creating social change, then you can very confidently ask others to join you as partners in making that change continue to happen. Collect, analyze and share the results of your nonprofit’s programs. Demonstrate the change that you are creating and that donors care about. With solid results to point to, you can confidently ask other people to invest in your successful work. At the end of the day, if your nonprofit is creating positive community value then you should confidently be asking for the money necessary to make that value grow.
Stop apologizing for needing the financing necessary to do the work and start finding and confidently inviting interested investors to partner with you. In so doing you will be moving your nonprofit from fundraising to financing.
Photo Credit: myguitarzz
I wrote last month about the crippling nonprofit fear of investment. Related to that, nonprofits need to understand and embrace the concept of Return on Investment. Nonprofit leaders often exist in such a world of scarcity that they don’t recognize that an investment today can have a huge payoff down the road. And not recognizing the value of a return on investment, particularly when it comes to a nonprofit’s fundraising function, can keep nonprofits in starvation mode.
One of the ways I consult with nonprofits is coaching a development director or executive director to increase money flowing to the organization. We work on getting board members to bring money in the door, identifying new donors, crafting a compelling message, launching new revenue streams, developing an overall financing plan.
This work could have a huge future payout:
- Board members no longer sit on their hands but actively recruit new donors to the organization.
- New donors are acquired through a thoughtful, strategic major donor campaign.
- A compelling case for investment convinces foundations and major donors to invest at higher levels and for longer periods.
- A new earned income stream brings in unrestricted revenue.
- An effective financing plan puts scarce resources to their highest and best use.
If you think of this in terms of return on investment it’s a no-brainer. You have two options:
- Continue to struggle day-to-day for the foreseeable future, or
- Make an investment today in order to dramatically increase funding and sustainability tomorrow
Let’s do the math. If a nonprofit with a budget of $1 million were to spend, say $5,000 on hands-on coaching to develop a financing plan, create a compelling case for investment, get their board engaged in fundraising, and launch a major donor campaign those elements could translate into well over $100,000 of new money annually for the nonprofit.
- A financing plan clarifies and marshals resources so staff and board know exactly where the money flows and who will do what to make it happen. The very act of creating and monitoring a financing plan could increase funding by 5%, or $50,000.
- A case for investment, when done well, becomes the backbone of any and all money-raising efforts. It can be integrated into your website, your social media efforts, your donor letters, your presentations. Telling a concise, compelling story makes donors sit up and take notice and adds perhaps another 2% increase, or $20,000.
- If your entire board starts (in their own unique ways) bringing money in the door that could increase your bottomline as well. If each member of a 15-person board starts to increase their own giving and/or the giving of those in their network by $1,000 each, that’s another $15,000.
- A major donor campaign charts a logical, strategic way for you to identify and acquire new donors. Getting strategic about how you find and recruit those donors will ensure much greater success, perhaps a 5% increase, or $50,000.
So with very conservative estimates the original $5,000 investment in coaching translates to $135,000 in new money every year thereafter.
My favorite example of this is when I helped KLRU, Austin’s PBS station use $350,000 in capacity capital to do many of the above things. After 3 years of implementing a new financing plan, using a new case for investment, and more, they were raising $1.6 million in NEW REVENUE each year. That’s a huge return on investment.
If you make a smart investment in improving the money engine of your nonprofit, that investment will pay off many times over, creating a more secure financial future for your organization.
Photo Credit: MeckiMac
I launched a Reader Questions series on the blog a little less than a year ago, but I have to admit I have been lazy about soliciting questions for it. The one time I asked for reader questions I got great ones and did a couple of blog posts responding to those questions here and here. But then I got busy and stopped soliciting questions.
So I want to reinvigorate the Reader Questions series now. I’d love to more consistently answer questions from readers and turn it into a much more regular series.
And I need your help. I’d love to hear about what issues are really tripping you up, what hurdles you encounter, what you’d like to learn more about.
So send me your questions about:
- Getting your board moving
- Being up front with donors
- Empowering your staff
- Raising capacity capital
- Developing a financing plan
- Finding new donors
- Creating a strategic plan
- Articulating your message
- Growing a nonprofit
- And anything else…
Whatever you struggle with and want to learn more about. Because the beauty of it is, if you are struggling with something, there are probably 100 other people who are as well, and they’d love to learn from your experience.
So if you start sending me your questions, I promise to be more consistent about the series. You can submit your questions on the Reader Questions blog page, in the comments of this blog post, on the Social Velocity Facebook page, or by sending an email to email@example.com. And don’t worry, if your question is a sensitive one, you can ask to remain anonymous.
I can’t wait to hear your great questions. Thanks!
I can’t tell you how often I hear nonprofit leaders complain about how difficult it is to raise money, how tired they are of banging their head against the wall, how difficult this economy is. Well, there really is a better way. And it starts with a really good money plan for your organization. But again and again I see the same mistakes being made in nonprofit fundraising plans, which is the topic of today’s installment of our regular Financing Not Fundraising blog series.
If you’re new to the series, our Financing Not Fundraising blog series shows nonprofits how to break out of the narrow view that traditional FUNDRAISING (individual donor appeals, events, foundation grants) will completely fund all of their activities and instead work to create a broader approach to securing the overall FINANCING necessary to create social change. You can read the entire series here.
Here are the 7 mistakes to avoid in your fundraising plan:
- Not Having A Plan At All. Yeah, not even having a plan is a huge mistake. It boggles my mind how many nonprofit organizations expect that money will magically appear at their doorstep. It takes an overall money strategy, what I call a Financing Plan, to effectively marshal your resources (staff, board, other volunteers, technology, materials) so that enough, and the right kind of, money comes in the door to achieve your goals.
- Creating Just A One Year Plan. You cannot expect to create a financially sustainable organization if you are only planning for money one year at a time. Your financing plan should project at least 3-years into the future in order to ensure that you have sound financial footing from which to operate. A true financial strategy takes a long view and plans accordingly.
- Including Only Private Dollars. Your money strategy must include ALL sources of money flowing to your organization, making it a Financing Plan. You cannot just plan for individual, corporate and foundation dollars, you also must plan for how government and earned income sources will flow, if they are appropriate to your model. And if you don’t have other sources of money beyond private dollars, you probably need to at least explore whether diversifying makes sense for your organization.
- Not Connecting It to Your Strategic Plan. Ok, I’m going to assume that your nonprofit has a strategic plan, even though many nonprofits don’t have one or they have a poor one. But once you have a strategic plan in place, you have to connect your money strategy to that plan. What good is it to have lofty program goals if you have no idea what those goals will cost (expenses) and how you will raise the money to make them a reality (revenue). You must have a multi-year financing plan that directly relates to your multi-year strategic plan.
- Ignoring Capital Goals. You can’t just raise revenue (the day-to-day money to keep the organization going), you also probably need capital (the money to build infrastructure, technology, systems) once in awhile. If you don’t include dollar goals for the amount of capacity capital your nonprofit needs, I doubt you will ever raise it. You cannot continue to operate with infrastructure, staffing, technology and systems that are inferior to your needs and goals. Determine how much capacity capital you need and include those goals in your financing plan.
- Not Giving Your Board a Role. You cannot leave the burden of raising money solely on the shoulders of your staff. One of the key responsibilities of a nonprofit board of directors is to ensure the financial viability of the organization they serve. So this means that the board as a whole and each individual board member must understand and play a role in the money strategy of the organization. So start by requiring each board member to give and/or get a certain amount (usually your major donor level) and then make sure your board “money committee” is active and engaged, and finally integrate money into every meeting and conversation your board has. Money MUST be top of mind for the entire board.
- Not Focusing On High Return Activities. Some fundraising plans include activities that a nonprofit has always done to bring money in the door without analyzing their effectiveness or expanding into new or more profitable activities. Start by analyzing the return of every money raising activity you engage in and then focus your money strategy on those that actually have a positive return.
I would love to see more nonprofits create a smart, long-term financing plan for their organizations. Because the reality is that those that do so will create more sustainable social change.
If you want to learn more about how to creating a financing plan for your nonprofit, sign up for our Creating a Financing Plan webinar.
And if you want to apply the other 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: Hiking Artist
Especially in challenging economic times like these it is critical for nonprofits to have a solid, well-thought out plan for bringing money in the door. But many organizations either don’t have a comprehensive fundraising plan, or they aren’t sure whether the plan they have is really going to effectively result in enough dollars.
In our on-going effort to provide tools to help nonprofits grow their impact and become more financially sustainable, we are releasing today a new Social Velocity step-by-step guide: Creating a Financing Plan. This step-by-step guide, like our other step-by-step guides, walks you through a process for creating a stronger, more effective organization. With this guide you will be able to create a strategy for strengthen and growing the revenue that flows to your organization.
We are committed to creating tools that are useful to nonprofits, so check out the ever-expanding Tools page of our website. Some of our others tools include:
- Step-by-step guides to creating a case for investment, a theory of change, a business plan, and a major donor campaign
- Monthly webinars on getting your board to fundraise, creating an overall financing plan, launching an earned income stream, overcoming founder’s syndrome, and much more
- E-books on financing not fundraising, raising capacity capital, and creating a ground-breaking board
As always, let us know what you think of our tools, or what additional tools you would like to see, either in the comments below, on our Facebook page, via Twitter, or email us at firstname.lastname@example.org.
Photo Credit: hans s