Diversify Your Nonprofit Funding The Right Way
Why do I bring the same amount of money in every single year?
Signed,
Frustrated Executive Director
“A goal without a plan is just a wish.”-Antoine de Saint-Exupéry
Has your funding plateaued in the last few years?
I know. It's difficult. You’re working harder than ever and raising the same amount as always. Some of you are even raising less. It’s frustrating!
We all know revenue diversity is a crucial strategy for growth and creating a sustainable model. Ideally, you’d have a diverse range of gift sizes, donor segments, and gift timing throughout the year.
Great! So how do we do that?
Make a Real Plan
The biggest planning misstep I see nonprofits make when it comes to diversifying their funding goes something like this:
The organization leadership plans for every little expense the organization needs each year. This isn’t the problem. I love using a month-by-month budget as an annual expense plan.
But, what about the income side of the organization? That’s where wishing comes into play.
“Well, we hope we can raise the funds.”
Organizations plan their expenses down to the last paperclip, but approach revenue with broad, imprecise strokes. They set funding goals, but never consider what they look like on a monthly or weekly basis.
Your takeaway? Spend just as much time planning your income pacing, gift diversification, and the gift sizes needed each month to meet your budgeted need.
Then, success lays in your discipline executing your plan, not your wish magically coming true.
The Key to Diverse Gifts: Single-Source Decision-Makers
I recently had coffee with a previous client where she shared with me how after years of receiving funding from a notable foundation, they decided not to fund her organization this year. We were both super surprised! After all, her nonprofit checks all their boxes! So, the reason they didn’t fund her might surprise you. Here’s what happened:
The vote of the members shifted.
There were voices on the committee who were strongly persuasive this year and convinced the majority to fund a cause that’s more prominent in the news these days. And despite having a great relationship with a few of the voting members, she needed the vote of the entire committee. Boo!
If your nonprofit needs steady, annual funding, you must focus on single-source decision-makers - those relationships you can build deep, direct access with and thus influence the decision. Foundations are unpredictable, and it’s too easy to become overly dependent on them.
Have you ever had a foundation in your portfolio change funding priorities, or even shut down? Then you already know what I mean.
Individual donors have a lot of growth potential, not only because there are many more of them than there are foundations making grants, but because they are solo decision-makers. You can build relationships with them.
Unrestricted + Diverse
One of the biggest challenges I hear from nonprofit leaders is that donors only want to fund programs, not operations or salaries. But you need money for those things, too. Diverse funding means you have funding for many different things, not just programs. We know when there are seasons of growth where you must invest in the organization's ops, admin, and fundraising to actually grow your mission and programs.
Good news! You have more control over this area than you might think. In fact, you might even be doing things that perpetuate the problem. I see lots of fundraising activities that are actually keeping nonprofits from fully funding their organizations.
Things like:
✔ Only talking about programs.
Do you educate your donors on how you plan to grow your impact by investing resources into the structure of the organization? This is your core message to investment-level donors.
✔ Presenting a budget that puts you at a disadvantage.
Think about your budget format. Are you forecasting it into the Functional Expense categories from your 990? If no, you’re not giving your donors the clearest possible picture.
✔ Asking for a restricted, project-based gift.
It’s your job to educate the donor. Help them understand your entire, annual need. You’ve got to use proper solicitation tools (like a gift chart) that allow you to discuss the bigger picture.
Deeper Discussions For Greater Revenue
Are you ready to move into deeper, investment-level discussions with your donors? Give your single-source decision-makers your attention, and make a plan for how you’ll educate and engage them. That’s how you fund your entire organization year after year, diversify your funding, and grow.
P.S.
When you’re ready . . .
1. Download my NEW [2021 Whitepaper] and learn how to create an annual funding model that secures the unrestricted money you need to grow (especially for overhead). Click here to get it.
2. Learn how to create this exact type of growth plan that attracts larger donors, in 90-days > If you'll small and raise between $500K and $1M in charitable revenue, are ready to up-level this year with individual donations, but you’re not sure where to start, I can help. You’ll learn my proven, step-by-step methodology nonprofit leaders like you have used to find donors, secure more unrestricted funding with these ‘overhead’ conversations, and become super confident solicitors. Just apply here and we’ll hop on a chat where I’ll talk you through the details. (And applying is not committing…it’s just a conversation).
3. Capacity-building work with Nonprofit CEOs or mid-and large-sized orgs > If you’d like to speak directly with me to break free from the sector’s traditional fundraising silos and models that are limiting and restricting your growth, just email me and put “Private” in the subject line. Tell me a little about your organization, your Advancement team, and what keeps you up at night when it comes to your revenue generation, and I’ll get you all the details.
- Sherry
