developing a diverse funding base

Developing a Diverse Funding Base

Presented by

Gayle L. Gifford, ACFRE

Copyright@2011 Cause & Effect Inc. (R)All rights reserved.2

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?

______________ ______________ ______________ ______________ ______________

______________ ______________ ______________ ______________ ______________


More about sustainability

When funders talk about sustainability, they usually meanGET 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?

________________ ________________ ________________ ________________ ________________ ________________ ________________

________________ ________________ ________________ ________________ ________________ ________________ ________________


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?

_______________________ _______________________ _______________________ _______________________ _______________________ _______________________


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 2nd 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 ____________ ____________


WorksheetHow 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

1. Stabilize • Keep the donors & customers you already

have• Replace the donors you lose

2. Add • New donors or customers • More dollars per donor


Designing Growth

The Gifts Pyramid


How to raise $1 Million

Number of Gifts Size of Gift Running Total Prospects Needed

1 $150,000 $150,000 4-5

1 $100,000 $250,000 4-5

1 $75,000 $325,000 4-5

2 $50,000 $425,000 8-10

2 $30,000 $485,000 8-10

4 $25,000 $585,000 16-20

5 $15,000 $645,000 20-25

10 $10,000 $745,000 40-50

10 $7,500 $820,000 40-50

20 $5,000 $920,000 80-100

25 $1000 $945,000 100-150

110 $500 $1,000,000 400-500


How to raise the next $100,000Four 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)

Range # Gifts RunningTotal

Prospects

$10,000 1 $10,000 4

$7,500 1 $17,500 4

$5,000 2 $27,500 8

$3,500 3 $38,000 12

$2,800 5 $46,400 20

$2,300 5 $11,500 20

$2,000 7 $71,900 28

$1,500 7 $82,400 28

$1,000 10 $92,400 40

Under $1000

15 $100,000 60

TOTALS 56 $100,00 224

Range # Gifts RunningTotal

Prospects

$5,000 2 $10,000 8

$2,500 3 $17,500 12

$2,000 7 $31,500 28

$1,500 7 $42,000 28

$1,000 10 $52,000 40

$500 13 $58,500 60

$250 30 $66,000 120

$100 30 $69,000 120

$50 120 $75,000 ****

$25 1000 $100,000 *****

TOTALS 1213 $100,000 5,000+


Range Gifts Running

Total

Prospects

$50,000 1 $50,000 4-5

$5,000 4 $70,000 16-20

$2,500 8 $90,000 32-40

$1,000 10 $100,000 40-50

TOTALS 23 $100,000 92 to 115

Range Gifts Running total

Prospects

$25,000 1 $25,000 4-5

$10,000 1 $35,000 4-5

$5,000 4 $55,000 16-20

$2,500 10 $80,000 40-50

$1,000 10 $90,000 40-50

$500 20 $100,000 80-100

TOTALS 46 $100,000 184-230

The next $100,000 if your strategy is… larger gifts (to $25K) major gifts (to $50K)


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

ConnectCaptureConvertCommunicate


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 protected] or [email protected]

www.CEffect.comGayle L. Gifford, ACFRE or Jonathan W. Howard

developing a diverse funding base

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