Taken from ICDA's member
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Spread the load to build financial sustainability
You're a mission-focused organisation, and your mission is long term. Your funding and your funding strategy should focus on the long term as well. The long term has to cover good times and bad times. You have to be able to survive both droughts and floods.
For this, you need to have money coming in from as many sources as you can manage. Organisations get into trouble because they have only two or three sources of funding. If any one of the sources are lost, the organisation slides into strife. You have to plan. You have to diversify. You have to innovate. And you have to prioritise.
Sustainability starts not with funding, but with planning. You should have a rolling three-year budget. The figures for two or three years from now may be a little rough and ready, but they need to be tight enough to demonstrate the assumptions you're working under, and the things that need to happen.
In the expenditure column you put your current spending plus any planned increases, and in the income column you put different scenarios: the optimistic, the steady-as-she-goes, and the pessimistic, and see what happens in each.
Diversify with the seven pillars
To survive and thrive in a changing world, you have to have many strings to your bow, many legs to your stool, and many irons in the fire.
The healthiest and most sustainable fundraising plans use a broad array of strategies, including these seven pillars:
- Community-business partnerships (e.g. sponsorships)
- Special events
- Earned income
- Crowdfunding and social media
You need to build a structure that's supported by enough of these props for it to remain standing even if one or more funding sources dries up.
No organisation should be so dependent on a single funding source that it is unable to function without it. For example, any organisation entirely dependent on government grants is extremely vulnerable, while a group that also receives support from earned income, several foundations and a pool of individual donors is clearly stronger and more secure.
Even if you are successful in getting grant funding or government money, you'll still probably need to raise money elsewhere, because these days few funders or grantmakers are prepared to pay the whole cost of anything. They prefer to fund project costs rather than running costs, and they'll almost always leave you to fund those of your goals that they do not share.
Diversity of funding allows flexibility of spending.
Governments, and government priorities, change. You have to work at raising money from other sources even when - in fact, especially when - you don't need to.
The higher the percentage of funds you can raise from individual donors, the more secure your organisation will be, because:
- You can spread the risk. If you lose a handful of individual donors, the organisation won't be as much at risk as if you'd lost one of your three sponsors.
- Individual donors are loyal and tend to give more over their lifetime, whereas foundations, governments through grants, and sponsors often give less and less.
- Individual donors are giving because they care about your mission, and they'll be interested as long as you're fulfilling that mission. Sponsors are interested in their bottom line, and they'll leave you in a microsecond when their spreadsheets say they should.
Bigger is better, too. Any not-for-profit organisation that isn't actively looking out for large donors doesn't have much confidence in its mission. If you believe that your cause is worth your commitment, you can sell the same idea to someone who's richer than you are and can contribute more (in money, at least). It does take work to track down and persuade these people. And, like all fundraising, it takes time that can ill be spared from your core mission objectives. But any Board that isn't doing that work is failing.
Bequests aren't reliable or predictable, but they're just about your only hope to build up the absolute ideal of sustainability - a body of money that'll keep you safe. Raise the possibility with all of your large donors. And small donors.
All levels of government give out grants, as do many philanthropic foundations and some corporations. Some grant schemes are applicant-driven: groups submit their project proposals, and the grantmaker picks the one they like best. Others are project-driven: the grantmaker has a specific project in mind, and advertises for groups who want to run that project.
In any case, you get the money to do a project. Before accepting the money you must be sure you have the capacity to carry out the terms of the contract, and after getting it you have to deliver.
The more you can establish a reputation for getting projects in on time, on budget, and to specification, the more hope you'll have of achieving a second round of funding or even ongoing support.
Sustainability is a selling point in your grant applications, incidentally. The people you deal with want to know that you're going to stay in business long enough to deliver the goods, and beyond that they want to know that their contribution will keep on working in continuing programs. If you can demonstrate a healthy mix of individual contributions and grants, they'll like it. Funders look at their grantmaking as a potential investment in your organisation, and they like to see that an organisation's funding base is diversified. They view this not only as an indicator of potential longevity, but also as a sign that there's broad-based support within your community for your organisation's mission.
Business partnerships and sponsorship
Mr Jones has thousands in the bank. The company that employs him has millions. Who are you going to ask for money?
There are two reasons why a company might want to enter into a relationship with your organisation, in any form. They might want to show what a nice company they are, in general terms - that's corporate social responsibility, or CSR. Alternatively, they might want to use your name to help sell their products - that's cause-related marketing, or CRM.
Whether you're entering a CRM- or CSR-based relationship, it's important to note that it's a partnership. That means both sides contribute, and you have to be able to show that both sides benefit.
Special events are for groups that have a large enough community of enthusiasts to drag their friends along to make up a crowd.
Special events are more sustainable if -
- they're annual events, not one-offs - you need to be able to build expertise.
- they're sponsored or supported - other people's money helps take the risk out of your enterprise.
- they're conducted jointly with partners who can help spread the load.
You don't want to discourage people without much money from using your services. You want your services to go to the people who need them. That doesn't mean, however, that you can't consider charging for your services - or at least some of them.
Some of your potential customers or clients probably do have enough to pay for their needs without any great hardship, and you may want to look at putting charges in place and having generous provisions for those who can't pay. It's a matter of balancing your mission against your survival.
Fee for service is one of the better ways to remain sustainable. People don't stop wanting a service just because a grantmaker has changed her or his mind, and even a partial and patchy fee-for-service income can be a vital prop in hard times.
Your membership is the core of your support, the people who really want you to stay in business. You need their enthusiasm more than you need their money, and you may not initially get a large net gain from this source. You can't set your fees so high that you'll deter people from joining, you can't squeeze members too hard or they'll leave, and you have to spend money servicing and informing and inspiring them. You get your value out of your members by enlisting them as volunteers, by using their contacts and their networks, and by approaching them to donate.
Membership income can be large or small, but it's important. If you have a consistent membership base then you also have a consistent revenue stream.
Social media is not, at this time, a particularly fruitful means of fundraising. The internet is about fleeting impressions, shallow involvement, and weakly held preferences, none of which encourage the kind of significant donations your budget hankers after. Right now, social media is a means of getting your group known and picking up prospects for your other fundraising rather than a free-standing pillar.
The major exception to this observation is the increasing use of crowdfunding, a social media application that places fundraising front and centre.
Crowdfunding is a social-media-enabled online fundraising campaign for a specific project. The fundraiser sets a dollar target, people pledge an amount, and the amount pledged is called on and passed to the fundraiser only if the target is reached.
Crowdfunding is a great way to get funding for a specific project. It takes energy and creativity, but it can bring in much-needed funding and attract a whole new audience of supporters.
The last word
No one funding stream can be a solution. You need to spread the load. We'll leave the last word to that great philosopher Billie Holiday:
Them that's got shall get
Them that's not shall lose
So the Bible said and it still is news
Mama may have, Papa may have -
But God bless the child that's got his own
That's got his own