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How To Get Funding For Your Nonprofit (Part II)

In last week’s blog post, we looked at a set of core principles that are critical for nonprofit organizations needing to raise financial support.  If you haven’t read it yet, check that one out before diving into this one.  It will make the ideas discussed below more effective.

So, what are some funding strategies that work?  Let’s explore four categories of fundraising:  direct appeal/pledging, professional programs, self-directed programs and grant funding.

Direct appeal/pledging. With this type of fundraising, you are literally asking people to give money to your organization, either through an individual gift or a pledge.  This is the simplest and most direct method of funding your nonprofit and it should be a component of most funding plans.  To be effective, however, you must be able to clearly articulate your program’s purpose and why someone should support it.  This requires your program to be a more attractive target for someone’s giving than some other cause.  I would again recommend you read last week’s blog article for a refresher on getting your pre-funding ducks in a row.  After convincing someone to donate, you must maintain a consistent stream of communication with your donors, keeping your program before them on a regular basis if you want them to continue supporting you.  That can be done through a variety of creative methods, one of the best being monthly newsletters.  Technology has made this so much easier and cheaper, too.  Instead of the hassle of dealing with printed material and postage costs, you may wish to consider a number of online communication tools that allow you to send newsletters, promos, etc. via email.  We like Constant Contact for this purpose.  You can also check out Aweber and some others.  All are similar in features and price.  They all come with pre-designed templates that make it simple to create good looking communications.  Another often-overlooked tactic is to send a receipt/thank you letter for every donation, not just at the end of the year.  Just remember that donor cultivation is a never-ending process.  As soon as you start letting that slide, you’ll see your support slide right with it.

Professional programs. This is event- or program-based fundraising that includes hiring a fundraising professional.  These types of programs can be highly effective in raising sizable sums of money in a relatively short amount of time.  They can also be very good for exposing your organization to a much-wider audience fairly quickly.  Examples may include golf tournaments, candy sales, carnivals, etc.  Another nice thing about this approach is that most of the creativity is brought to the table by the fundraising company you hire.  There are great pre-packaged campaigns that are fully-turnkey.  You supply volunteers and go.  Just today, my daughter’s school conducted a “fun run” event where the kids ran laps around a 1/16th mile track.  They have been working for the last week or so securing per-lap sponsorships from parents, grandparents and anybody else they could corner long enough.  The event was totally turnkey.  I was really impressed with what this company was able to do.  The kids even got daily prizes for signing up sponsors.  It was a really fun, high energy event for the kids…my daughter had a blast!  But better yet, the school raised a nice sum of money.  Most fundraising companies get paid by charging a reasonable percentage of the haul, though some do charge flat fee.  Hiring a professional takes homework on your part, though.  Fundraising companies are not all the same.  Many are barely above being considered a scam, with some charging extortionary percentages.  Always, always check out a company you are considering.  Talk to nonprofits who have used them.  Do a Better Business Bureau inquiry.  All it takes is hooking up with a bad fundraising company to really ding your organization’s reputation.  Also look for hidden overhead costs over and above the cost of the company itself.  It’s not impossible for a fundraiser to cost more than it makes.  Just know what you are getting into.

Self-directed programs. These are similar to professional programs, except that your organization handles everything.  There are pros and cons to this.  On the upside, it can be less expensive than hiring a professional and can allow for greater flexibility than a pre-packaged program.  On the downside, it usually requires much more effort from the organization and its volunteers.  Plus, the administrative cost of creating necessary materials from scratch can sometimes be more expensive than the economies of scale associated with a pre-packaged arrangement.  Some fundraising programs, however, just lend themselves better to doing it yourself.  Another example from my daughter’s school is their semi-annual children’s consignment sale.  It is a huge hit in the community and generates net profits of around $100,000 annually.  The PTO does all the work…and believe me, it’s a lot of work.  It takes dozens of volunteers and planning for the next one begins immediately after the last one is finished.  But, it is extremely successful and profitable.  The key to any self-directed program is to make the effort to do it right.  No half-efforts.  One of the reasons the Girl Scouts are so successful is because their cookie sale is legendary for its efficiency and, well, its great product.  You can do it, too.  Programs like this, done right, don’t even feel like a fundraiser to your supporters.  They will be looking forward to the next one.  Just be prepared to work hard.  It can really pay off.

Grant funding. This is such a misunderstood topic, it almost doesn’t belong in this article.  In fact, we will only scratch the surface here.  Grant funding is unlike any of the above.  It usually entails applying for funding from a foundation or government agency, often without any personal relationships involved.  Contrary to what a few unscrupulous freelance “grant writers” may tell you, it is very difficult to secure and to keep.  You will need to have established a successful program that a funder will want to help you improve.  Startup funding is almost non-existant.  Also, grants should never replace the above efforts.  We’ve seen organizations be fortunate enough to land grand funding, then completely neglect the grassroots.  There is no faster way to self-destruct.  When the organization loses its funding, as often happens, there is no community support to keep it going.  We’re not against grant funding…it may be a great resource for you.  Just be realistic about it.  Do extensive research into agencies and foundations that support causes like yours (the Foundation Center (not related to us) is a great resource for information).  Hire an experienced grant writer or learn to do it yourself.  Be forewarned…good grant writers are expensive.  If it sounds too cheap to believe, it probably is.  Also, be prepared for rejection…lots of it.  You may be one of 100 or more organizations vying for the same funding.  It could take years of trying or, you may never succeed.  One of the best pieces of advice we can give is never rely on it.  You will be disappointed.

There is so much more that we could say…and we will explore these topics more thoroughly down the road.  We hope these two installments of the blog have caused you to think more realistically and more strategically.  Success is never easy.  But it is rewarding.

Greg McRay, EA

Greg McRay, EA

Greg McRay is the founder and CEO of The Foundation Group. He is registered with the IRS as an Enrolled Agent and specializes in 501(c)(3) and other tax exemption issues.

This Post Has 8 Comments

  1. I am REALLY glad I came across this website. It is LOADED with valuable and useful information. Thank you so much, and PLEASE keep it comin’!

  2. l am very much glad with the information. We are looking forward for your assistance and also to keep us updated with information on how to get funds as soon as possible. We also believe that the sooner we get funds our [vision] will be accomplished through your massive support. l also want to learn more.

  3. this is very good information and a great starting place for our organization and others just starting out. I am looking forward to the next blog to learn more.

    1. Thanks for the comment, Francis. We will discuss funding issues much more thoroughly in future posts. Visit the blog often or subscribe to the RSS feed to keep up with all updates.

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