For most nonprofits, only a few streams of funding are possible. People new to fundraising and nonprofit organizations often aren’t aware of all the options for funding. And seasoned leaders wish and hope for a few more.
Puzzle Pieces and Moves
Government grants and contracts.
Client or customer payments, which we call fee-for-service income includes payments for services in the form of dues, tuition, tickets, memberships. Another example is in social services, where the fees often are somewhat symbolic and necessarily under market rate.
The largest donated revenue stream for nonprofit organizations is individual donations, in capital, major, and grassroots amounts. Add to that bequests, a source that is not insubstantial for some organizations, but is unpredictable as to when funding may be released. Crowdfunding fits in here as a technique or strategy for individual donations, as does good old direct mail, door-to-door canvasing (which. I. personally. despise), and the Face-to-Face Big Gift Ask.
Far behind, in second place for donated revenue, are foundation grants. And then grants, and sometimes contracts, from corporations. These are important and can bring with them credibility and leverage, and they generally come in larger amounts than the typical individual donation.
Nonprofits also can secure loans and a special type we call program-related investments. But it generally takes a lot more strategy and effort and relationships than needed for small business. Finally, of course, there are in-kind donations, the donation of things (canned goods, used officefurniture, union printing) and services (e.g. pro-bono legal counsel). And for some organizations, perhaps most importantly, volunteer time.
Solving your puzzle
That’s pretty much it. The funding puzzle only has so many types of pieces and moves. For your organization, the right solution
- builds upon its strengths of skill, experience, and relationships;
- takes into account the wants, both of those who benefit from services and of those who benefit from contributing (aka value proposition);
- engages the ones can be mobilized to do the asking and the thanking;
- can be accomplished with the available time and resources; and
- provides more than enough funding, so that the program work can continue and evolve as needed to be relevant and effective.
That last point describes having a realistic business model, which is the fundamental puzzle underlying all the fundraising questions. It is also a topic for another post (watch this space).
Unlike some puzzles, no one solution works for every organization. The challenge to nonprofit leaders — executives, staff, and board members — is to discover and manage the unique sequence of moves that will best support your work now, in this place, and into the future.