HHS Sustainability Toolkit
Part 5: Sustainability Strategies: Fund Development and Fundraising
Developing a sustainable funding base is a recurring issue facing small grassroots organizations. A solid financial base ensures that essential services will continue even if a major piece of funding is lost. An organization can start planning for sustainability by developing a funding plan and choosing the most appropriate funding sources for the work it does and the objectives it wants to achieve.
Fund development planning is part of the strategic planning process. A fund development plan dictates a course of action for an organization and provides a systematic way to identify key stakeholders and donors who can help address community problems and are passionate about their work.
Planning for Fund Raising and Fund Development
Your organization should have a clear understanding of its funding needs, the specific projects to be funded, and the amount of money that is needed. To begin this process, your organization should:
- Select board members, staff, collaborative partners, and stakeholders to serve on a fund development committee or team.
- Set a funding goal. Be realistic.
- Develop procedures for the committee and assign tasks related to the mission and goals.
- Develop a strategic funding plan and select strategies to support the mission and programs.
- Outline action steps and timelines to accomplish goals.
- Implement plans and activities.
- Decide how many donors are needed to meet the goal.
- Use resources that already exist in your organization.
- Identify strengths and weaknesses of your organization.
Diversifying Funding Sources
Using a combination of funding sources will help to ensure long-term financial sustainability for vital programs. Diversifying funding sources provides your organization with a flexible funding base that accommodates multiple sources of funding support and taps into a wide array of funding options that are consistent with the mission, goals, and core services.
Two key elements of sustainability are knowing what income streams are available and being open to new approaches. The next step is to understand the kind of money that is available. Different funding streams are accessed and managed in different ways and involve different relationships with individuals and funders. Financial sustainability can involve all potential funding streams or a limited number of funding streams, depending on the needs of your organization.
Developing Sustainable Relationships and Partnerships
Finding the right funding source to support the organization's mission is important, but building sustainable relationships with funding sources is even more important. They need to meet you and talk with you, and this won't happen unless you take the steps necessary to introduce yourself to them and tell them about your vision, mission, and accomplishments.
Building sustainable relationships is the core of fundraising and fund development. Through these relationships, your organization's vision can be realized and its mission achieved. Community- and faith-based organizations use various types of partnerships and relationships to facilitate their ability to conduct their work.
Many grassroots community- and faith-based organizations depend on individual and corporate donors. Through donors, the public learns of your organization, helping it to establish visibility and credibility. Knowing how to attract, nurture, and sustain relationships with donors may be the key to keeping your organization going.
Attracting Donors
Donors give to your organization because they believe in your work, and they expect that you will have the competencies to fulfill that work. Here are some points about getting donors to notice your organization:
- Get to know the donors first. Then express your appreciation in a way that speaks directly to them.
- Make an impression.
- Network with and get to know current donors. They are an example of the types of donors that are interested in your organization.
- Tell your organization's story as often as possible and highlight the number of clients that have benefited from your program.
- Discuss the benefits that a donor's contributions will have on the lives of consumers and the goals of the organization.
- Discuss potential donors with the board of directors, key leaders, and volunteers.
- Say it with numbers. Use statistics to show potential donors that services from your organization have the potential to improve the community.
- Build bridges. Look for opportunities to network with potential donors.
Nurturing Relationships with Donors
Donors rarely give money at first contact. They are much more likely to give "out of a relationship." Here are some ways to solidify a personal relationship with donors:
- Appreciate donors. Donors have reasons as to why they give. Know why they are giving.
- Send donors a thank you note for their donations.
- Invite donors to lunch or to your program events.
- Find out if donors have friends who might be interested in supporting the organization.
- Understand a donor's commitment. Get to know why a donor is committed to the cause of your organization.
- Involve donors. Find ways to use donor's gifts and interests.
- Understand the roles of stakeholders. Understand the corporate sponsorship of a fund-raising event.
- Tailor communications that speak directly to the donor.
Benefiting from Donors
Your organization may benefit from donors in more ways than just receiving their donations:
- Professional coaching and mentoring
- Physical property and real estate
- In-kind contributions
- Direct sales
- Free advertising space
PART II
Strategies for Business Ventures
Many nonprofit community organizations get into other businesses as a source of long-term funding. Entrepreneurial and earned-income ventures are two types of business ventures that an organization can choose to advance its mission. These are two of the largest resources of income that create a steady stream of unrestricted funding, thus aiding in sustainability and self-reliance.
Every community- and faith-based organization has opportunities for earned income within its programs and can build worth and value in those that they serve. This enables an organization to tap into the many potential assets and gifts, such as entrepreneurial ventures and earned-income possibilities, of its clients to benefit both itself and the client.
Here are some questions to consider before launching a business venture:
- Will starting a business venture compromise your organization's mission? An initiative should never take an organization off its mission.
- What kind of business meets the needs of your mission?
- Are the investment, time and money worth making?
- How much funding will the new venture generate, and what is the initial investment?
Some Benefits of Business Ventures
Revenue is the main benefit of entrepreneurial and earned-income ventures. But aside from revenue, these ventures have additional benefits:
- Strengthens the mission of your organization by building on current activities, existing capabilities, and already-established relationships with stakeholders
- Increases visibility for your organization and the business itself
- Increases the self-sufficiency of your organization, thus reducing its reliance on donations and grants
Business Ventures: Franchise Opportunities
Owning a franchise is one way that community- and faith-based organizations can help to pave a path toward sustainability. It is also a unique opportunity for the franchiser to expand its market and tap into and benefit from qualified community organizations.
A franchise is a legal, commercial relationship with the owner of a business involving a trademark, service mark, trade name, or advertising symbol. Through a franchise, an organization is authorized to sell goods and/or services of the parent company in either a retail space or a designated geographical area.
When looking for the right franchise, your organization should answer several questions:
- What is your organization willing to give up and gain? Defining, researching, and teasing the potential value of the proposition can help to answer this question.
- Is the franchise well-suited for your organization's mission?
- Is the franchise established and successful, and known in and accepted by the community?
- Does your organization have the dedication and capital to invest to become a business owner?
- How much funding will the venture generate?
Examples of Community- and Faith-Based Franchise Owner/Partnerships
Brentwood Baptist Church in Indiana leased space to an independent McDonald's, meaning the McDonald's Corporation did not own this particular restaurant. Although some parishioners are employed, the church has little involvement in the management of the business. The arrangement generates some revenue for the church.
The Latin American Youth Center of Washington, DC, bought and operates a Ben & Jerry's to provide job training opportunities for its clients. Opened under Ben & Jerry's PartnerShop program, the franchise is located in one of the district's affluent neighborhoods. The Center hired 15 of its clients (or full-time equivalents, depending on the season) to work at the franchise. It opened a second PartnerShop in Washington, DC, in 2004.
Community- and faith-based organizations have many ways to finance their programs and services with hopes of ensuring sustainability. However, having a range of income sources is not the only answer. Organizations must know which funding option complements or advances their mission and which one places the least amount of tension on the organization so that it can continue to deliver needed services to the community.
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