Exploring Sustainable Funding Models for Your Organization

NLPJune 22, 2015

Amy Nisenson & Marianne Vermeer

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Introductions

• Name

• Your Organization and Role

• The Best Movie You’ve Seen in the Last 12 Months

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Admin & Housekeeping

• Format of the course

• Timing and breaks

• Restrooms

• Dining options

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Your Objectives

• What do you hope to learn from this class?

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Learn about different funding models for your nonprofit organization

Using the matrix map as a tool Evaluate your org.'s sustainability based on your

funding model How will you begin to make changes towards

achieving sustainability Hear from 2 Richmond organizations that are

using the matrix model and how it has assisted them

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Sustainability

According to Wikipedia... “The capacity to endure”

•Ability to generate resources in the present without compromising the future (Financial Sustainability)

• Ability to develop, mature, cycle out programs to be responsive to constituencies over time (Programmatic Sustainability)

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Vision

Optimal goal and reason for organization’s existence

What are values and beliefs that inform work of organization?

What do you ultimately hope to accomplish as a result of efforts?

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Mission

Long-term direction that guides every aspect of organization’s daily operations

Nonprofit’s purposeGroups it serves/benefits from work of

organizationHow it plans to do so

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Exercise

Pair up with 2 other persons—15 minutesShare your organization’s mission statementShare your organization’s vision statementIs your organization on mission and vision?If not—why not?If yes-what are some accomplishments

towards mission and vision?Who is willing to share with the whole group?

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Strategic Plan

Road map for operational plan of organizationElements of traditional strategic plan:

Define or review the mission and vision of the organization

Carry out SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis to assess your strengths, weaknesses, opportunities, and threats

Define your goals and objectivesWrite the planDraft operational plansMonitor progress

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Business PlanShould be part of your initial planning process and makes the financial case for moving ahead. Must be able to justify the need for your organization, rely on continual revenue, and keep expenses under control.

Elements of a Business Plan:Executive summary: overview--who, what, where, why, and how.Organization description: past, present, and future activities/nonprofit alignment with missionMarket analysis: outside competition, pricing structure, and marketing planFinancials: multi-year analysis of revenues, expenses, and projected cash flows.Operations plan: outline of the daily activities, staffing, and general procedures.Appendices: Additional or back-up documents - Resumes of key staff, an organizational chart, market research results, a list of funding sources.

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Funding Model

Funding Model—

Defined as a methodical and institutionalized approach to building a reliable revenue base that will support an organization’s core programs and services

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Characteristics of a Funding Model

• Type

• Decision makers

• Funder motivation

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Type of funding

The model typically revolves around a single type of funding, such as

government or individual, which constitutes the majority of the organization’s revenue and which the organization invests disproportionately in developing.Staffing, marketing, core competencies are generally

defined by this fundingFunding needs to be appropriate for the work the

organization does- there is some logic to this! Other smaller sources often play complementary

supporting roles but are not the focus of investment

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Funder Decision Makers

Within that principal source of funding, the model focuses on a

particular set of people who dictate the flow of funds—perhaps government administrators or a

few wealthy individuals.

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Funder Motivation

A funding model takes advantage of the natural matches that exist between

funder motivations and a nonprofit’s mission and beneficiaries. These motivations range from altruism to collective interest to self-interest.

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10 Funding Models

1. Heartfelt Connector

2. Beneficiary Builder

3. Member Motivator

4. Big Bettor

5. Public Provider

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10 Funding Models

6. Policy Innovator

7. Beneficiary Broker

8. Resource Recycler

9. Market Maker

10. Local Nationalizer

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Heartfelt Connector

Funding Source: IndividualsFunding Decision Maker: Multitude of IndividualsFunding Motivation: Altruism

Unique Characteristics:•Broad mission appeal•Benefits touch funder’s family and friends•Nonprofit connects to donors through volunteerism

Fundraising Tools to consider:•Special events•Direct Mail•Corporate sponsorship

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Beneficiary Builder

Funding Source: IndividualsFunding Decision Maker: Multitude of IndividualsFunding Motivation: Self-interest, followed by altruism

Unique Characteristics:•Mission attracts individuals pursuing and paying for specific individual benefits•Benefits and mission tied to strong individual connection (4 years at University; saving lives)•Benefits created viewed as having important societal benefits

Fundraising Tools to consider:•Fees•Major gifts

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Member Motivator

Funding Source: IndividualsFunding Decision Maker: Multitude of IndividualsFunding Motivation: Collective Interest

Unique Characteristics:•Benefits have group orientation that creates collective community to tap into for fundraising

Fundraising Tools to consider:•Membership fees•Special events•Major gifts•Direct mail

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Big Bettor

Funding Source: Individual or FoundationFunding Decision Maker: Few individualsFunding Motivation: Altruism

Unique Characteristics:•Builds majority of support from small number of individuals or family foundations•Mission may take many decades to fulfill (finding cure to a certain disease)

Fundraising Tools to consider:•Major gifts

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Public Provider

Funding Source: GovernmentFunding Decision Maker: PolicymakersFunding Motivation: Collective Interest

Unique Characteristics:•Provides services that are perceived as core gov’t responsibility (foster care)•Clear definitions exist of the services and processes that nonprofits provide (RFPs)

Fundraising Tools to consider:•Government contracts

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Policy Innovator

Funding Source: GovernmentFunding Decision Maker: PolicymakersFunding Motivation: Collective Interest

Unique Characteristics:•Secures gov’t funds for a significant new approach to a problem or to address a problem not currently viewed as core gov’t. responsibility•Requires a high level champion•Succeeds when significant pressures exist on gov’t as a result of fiscal or medical crisis

Fundraising Tools to consider:•Legislative appropriation or earmark•Executive earmark•Government pilot project

Beneficiary Broker

Funding Source: GovernmentFunding Decision Maker: Multitude of IndividualsFunding Motivation: Self-Interest

Unique Characteristics:•Individual beneficiaries decide how to spend the gov’t benefit•Must navigate and influence gov’t decision-makers for eligibility and compliance with reimbursement requirements•Requires individual marketing capability to reach and service end beneficiary

Fundraising Tools to consider:•Government reimbursement

Resource Recycler

Funding Source: CorporateFunding Decision Maker: Few individualsFunding Motivation: Self-Interest

Unique Characteristics:•Nonprofit uses goods created in the market-economy where there are inefficiencies that create a surplus (food)•Sometimes the marginal costs to produce the product are low (pharmaceuticals)

Fundraising Tools to consider:•In-kind giving

Market Maker

Funding Source: MixedFunding Decision Maker: Mass of individuals (one side); few individuals (other side)Funding Motivation: Altruism (one side) and Self-Interest (other side)

Unique Characteristics:•A funder with some degree of self-interest and the ability to pay exists (a health system buying blood)•Often, one of the parties involved in the transaction is motivated largely by altruism (blood donor)

Fundraising Tools to consider:•Fees•Major gifts (corporate or individual)

Local Nationalizer

Funding Source: MixedFunding Decision Maker: Few individuals Funding Motivation: Altruism

Unique Characteristics:•The issue is one of a few top priorities for improvement or success in a locality (quality school system)•The issue is common enough to exist in many localities nationwide•The level of funding available in any single geographic area is usually limited

Fundraising Tools to consider:•Major gifts (corporate or individual)•Special events

Why are these funding models important?

• Nonprofits must understand their funding strategy and funding streams to raise money

• Knowing your funding model helps nonprofits focus more

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What is your funding model?

• Turn to the person on your right

• Share with him/her what your funding model is

• What are the sources of funding that your organization primarily counts on?

• Does knowing your model help you vision new sources?

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Profitability & Mission Impact

• No, it’s not an oxymoron… even non-profits have to be able to make enough money to cover their costs

• Be able to parse your activities and services- and their relationship to your mission and vision.

• Analysis of both financial viability AND mission impact

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Analysis: Part OneImpact Analysis

• First, be able to list your activities: your programs, services and fundraising activities- ALL of your activities!

• Second, quantify the impact of each program and service• Outputs, outcomes and impact: all important

• Outputs: what you do (# clients services, # training programs, # phone calls)

• Outcomes: what happens as a result of your outputs? • Impact: what has changed? How has the needle

moved for the problem you are trying to solve?

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Analysis: Part OneImpact Analysis

(cont’d)• How do you measure?

• How do these relate to the mission and vision of your organization?

• Rank the programs and services on the IMPACT they have on your target beneficiaries

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Analysis: Part TwoFinancial Viability

• Analysis of the revenues and expenses associated with each activity or service offered

• Objectivity in the process

• What does it cost to offer each service or program? Need to allocate overhead to each of the items listed in Part One.

• Rank the programs and services in order of financial profitability

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Matrix Map

• Put Parts One and Two together

• Provides a picture of where your organization’s programs and services help you meet your mission AND

• What combination of impact and profitability provides the best strategy for sustainability

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How to Map Your Organization

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Put your analysis on the Map!

High ImpactLow Profitability

High ImpactHigh Profitability

Low ImpactLow Profitability

Low Impact High Profitability

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Sample Matrix Map

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Panel Member

Harold Fitrer, Ed. D, President/CEOCommunities in Schools of Richmond, Inc.

CIS of Richmond surrounds students with a community of support, empowering them to

stay in school and achieve in life. CIS of Richmond works inside Richmond and Henrico

County Public Schools to help kids stay in school by identifying and addressing unmet

needs of children and families-needs that when left unanswered, contribute to the dropout rate.

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Panel Member

Mary Allen Waller, Board ChairLegal Information Network for Cancer

LINC provides a different kind of life support to people with cancer. LINC’s clients are

predominantly low-income and do not have the support network or resources to deal with the overwhelming financial and legal issues

that typically arise when dealing with a cancer diagnosis, treatment and survivorship.

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Questions to consider for Panel

• How have you used Matrix Map in your organizations?

• What has changed as a result?

• How would your rate your organization on its sustainability focus?

• What advice would you give to organizations doing this for the first time?

• What involvement has your board had in this process and in these discussions?

• Other Questions from class?41

How can your Board help with sustainability?

Board needs to take an active role in fundraising

• Ensure development plan and monitor progress.

• Create fundraising and donor recognition policies.

• Ensure fundraising methods adhere to ethical standards.

• Participate in fundraising.

• Monitor progress and evaluate outcomes.

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How can your Individual Board Members help with

sustainability?Individual Board members have their own responsbilities

•Make meaningful contribution

•Identify, evaluate, and cultivate prospects

•Make introductions

•Organize and attend special events

•Attend face-to-face solicitations

•Write or sign appeal letters

•Thank donors

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Does 100% of your Board contribute?

Why should the full Board make a monetary contribution?

•Demonstrates personal commitment

•Gives board members confidence to ask others to give

•Encourages other funders to give

•Creates board member “ownership”

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Can your Board articulate the Elevator Speech?

Elevator Speech•A compelling 30-second description of your organization’s plans, delivered as part of a two-way conversation, that educates and, hopefully, elicits interest from listeners.

•A critical component of success for an organization’s self-sufficiency and sustainability.”

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Can your Board help make the Case for Support?

Case Statement

•Focus on the results, not organization’s needs.

•Include clear, essential facts.

•Add a connection to the community.

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The Board’s Fundraising Responsibilities

apnconsulting2014/boardsource

• Define or clarify the mission

• Support organizational stability

• Identify strong leadership

• Approve adequate budgets

• Plan for the future of the organization

• Be familiar with the overall fundraising plan

• Participate in the fundraising process

Staff roles in fundraising to support the Board

apnconsulting2014/boardsource

Chief Executive (Executive Director)

• Works in partnership with development staff and board

• Primary representative of organization

Development Staff

• Manages day to day work of development

• Depends on what staff organization is able to hire and what duties are (i.e. Development Director will have different role if oversee staff such as grant writer, planned giving expert, etc. or if they have to do it all)

Staff roles in fundraising to support the Board

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Development Staff or other staff (continued)

• Coordinates fundraising against development plan

• Manages process with support

• Prospect research

• Database management

• Gift recording

• Accounting

• Special event planning and oversight

• Coordination of fundraising entities within larger nonprofits

• Donor relations

Typical Fundraising Duties of the Chief Executive

apnconsulting2014/boardsource

• Serve as the organization’s representative to potential funders and the community

• Serve as a contact for donors

• Ensure compliance with funding sources and regulatory requirements

• Hire and supervise fundraising staff

• Initiate and assist the board in developing fundraising policy and setting priorities

How can board members help?

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“When the paradigm shifts from asking for community support because an organization HAS needs to asking for support because the organization MEETS needs, the tin cup disappears.”

Kay Sprinkel Grace, The Nonprofit Board’s Role in Setting and Advancing the Mission

apnconsulting2014/boardsource

• Become trained in fund development strategies and techniques

• Get comfortable with “the ask”

• Help identify potential donors

• Involve staff at the start—let them know of any prospects you’re thinking about

• Commit to helping with a fundraising project

How else can board members help?

How else can board members help?

apnconsulting2014/boardsource

• Understand the importance that each interaction they have with others in the community is part of the development process

• Understand why they are on the board and what they can bring to the table

• Understand what the staff’s roles are and how they can assist them

Exercise

• Pair up with another person

• Share one or two ideas of how your board members can assist with your fundraising

• If you have no fundraising staff or limited staff, how does this change how the board members might assist?

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Takeaways

• What are your key takeaways from today?

• What will you take back to your organization?

• Other ideas or thoughts you want to share

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