Sunday, November 07, 2010

How Your Nonprofit's Fundraising Can Be Successful in the Coming Fiscal Year

It can be very intimidating for any nonprofit's leadership to anticipate how much a nonprofit will raise in the coming year.

Nonprofit boards, this time of year, are finalizing and ratifying budgets for next fiscal year.  That process entails budgeting for or anticipating income from all revenue streams.  Some nonprofits only do a couple of special event fundraisers and some grant writing, all year long, to raise all of their money; others conduct a year long calendar of many more different types of fundraising methods (perhaps everything from including donor remittance envelopes in quarterly newsletters, to grant writing, to six different special events, to a major donor campaign, etc.).  But how can any nonprofit, from a brand new one, to a long existing organization determine how successful it will be at grant writing, or any fundraising, for that matter?

In an economy like our current economy, it can be a bit challenging to anticipate whether they will successfully raise enough funds to cover all of next year's costs.  Yet, while it is a tenuous economy, there are some things any organization can do to be successful at fundraising of all kinds.

Let's take a look at three different pretend nonprofits to help understand how different nonprofits can best budget for grant writing income.

We have Native Beans, a one year old nonprofit organization dedicated to researching, studying, preserving, and disseminating old species and varieties of beans, their plants, and seeds.  They are partially funded by a collaboration with a nearby university's biology department, and raising the rest of their funds, themselves.  While they are making a good go of getting off the ground, this difficult economy has been a serious challenge for them.  They have never done any grant writing.

Let's say, next, we have Fans for Frankenstein, a nonprofit committed to researching, locating, and monitoring or curating where anything having to do with Mary Shelley's original Frankenstein book or any Frankenstein movie, ever, is.  It is a five year old nonprofit, so it's not terribly old, but its membership and fundraising is growing, as currently there is a interest in classic horror, today.  They just began grant writing, annually, two years ago and while things have been slow going they are just recently beginning to receive some of their first grants ever.


Finally, we have Hospice With Honor, a sixty year old, well established, reputable, well known, and well staffed nonprofit that is very good at communicating with its supporters, marketing its successes and mission in its community, and has an executive director and board who are well trained and use that training to regularly network (discussing the organization and its successes) and who are each active fundraisers (working in coordination with the fundraising office).  Hospice With Honor has an established base of regular individual donors, has conducted mostly all other forms of fundraising, and has an operating budget of $1 million (which means their organization averages $1 million in annual operating expenses, and raises at least $1 million annually, in order to fund its operations).  They have been conducting grant writing, specifically, (one of their many annual revenue streams (or fundraising methods)) for thirty years and are very successful grant raisers.

To begin with, for each of these differently positioned nonprofits, there are a few things that they each or all should already be doing (in order to be raising enough money to successfully operate and grow, each year):

__ Especially in an economy like ours' currently is, but really in any economy, one of the strongest positions a nonprofit can put itself into to hedge against inflation and a difficult economy is to diversify or vary where and how income comes into the organization.  For an explanation of why and how read, Bring In Donations From Many Different Kinds of Sources

__ Monitor and track the results of each of the various different fundraising methods the organization is using all year long, each year (again, in any economy, but especially during a down economy) in order to monitor: if the anticipated rate of return is being met, whether each fundraiser is cost effective, and where the weaker fundraising methods the organization is conducting are so that either improvements can be made, or if necessary, so that the weak link can be dropped and replaced by something more effective.  Remember, too, that on average, in the United States anyway, it takes about three or more years for a brand new fundraising method that is conducted annually to begin to make money for the organization.  And, after that initial 'up front cost' of getting the new fundraiser method started (year 1 through 4), its income (no matter what the fundraising method is) should relatively consistently grow, over time, to be considered successful.

__ The organization that positions itself well by being an excellent organization is going to have an easier time generating new donors while also retaining current donors, successfully growing its individual donor base, because donors will be confident giving and then giving again to an organization that is: mission-focused, ethically operated, well managed and run (efficient), is successful at its work (from real demonstrable findings (actual data) from evaluations after each program and service is conducted), is communicative (and honest) in its community, and more.  For a discussion on why organizations positioned as such raise more money and donors and how this is done read, We Need Money for Our 501(c)(3) etc. Organization - What Is the Grant Seeking Process?  and  Here's A Handy Checklist for Nonprofit for Operations and Fundraising Success...

__ The organization operates as described above, over time, (or according to professional best practices) in order to retain donors, community support, and to continue to be relevant, compelling, successful, and reputable.  For more on this concept, read How to Raise Money, Even In This Economy and Fundraising, Grant Writing, Mission-Success, Community Building; It's All the Same

Where these three example organizations' individual situations will cause them to act differently, in order to budget for the coming year's grant writing income in a realistic manner is the following:

Native Beans is a brand new nonprofit.  It's only getting its own programs and services going, its name is just getting known, and its fundraising has just recently begun.  In every way this organization's leadership's work (in all of its fundraising (grant writing and everything else its doing to raise funds) and also in growing its name and reputation) is networking in the community and marketing (and public relations).  The organization needs to be checking off everything in the "...Handy Checklist..." blog post but also they need to be relating to their community (i.e. wherever their potential donors, volunteers, and (someday) staff live and work).  If a grant donor receives a grant request from Native Beans, but its staff or board has never heard of the organization, there might be some question as to whether they're a sound 'investment' to give a grant to.  Native Beans, though, even being a brand new organization can engender confidence in its potential grant donors (and, in fact, all different types of donors) by conducting only very relevant (current) programs and services, having a strong track record that it can point to (i.e. showing why its work is critical to the community, today, and how successful they are at achieving those benchmarks and goals) and why they are suited to continue to be successful going into the future (operations are strong, reputable and credentialed volunteers and staff are key in the programs and services, etc.).

Fans for Frankenstein is five years old, so far is doing pretty well (given the economy, especially) at both growing its membership and also fundraising, and only began grant writing two years ago but are starting to bring grants in.  First, it takes time to initiate a grant writing program and then for any grant writing program to bring in grants.  When a nonprofit considers and begins grant writing, there is usually an up front expense (again, like starting any other fundraising method), that requires time before it begins to 'pay off'.  This is a perfect reason to plan out, in advance, any fundraising method that is being done for the first time at a nonprofit; and it's a reason why a nonprofit that has leaders who proactively position it (in its administration, management, and operations) from the start, and going forward, to be successful will spend less on its fundraising, overall, compared to a less well managed or planned out organization's operations.  Second, this organization is learning the value in being consistent in letting the communities in which it operates know what its name is, its mission, why its work is needed today, what its programs are, what its achievements have been, and what its current goals are (and how anyone interested in doing so can help or support Fans for Frankenstein).  As they begin to bring grants in, they let all of the other grant donors to whom they've submitted grant applications to but have yet to hear back whether they're receiving a grant, which grants they just received and from which foundations (because donors are made confident, too, by other grant donors deciding recently to give).  They are certain to maintain unobtrusive but responsive and professional proactive relationships with the grant donors that do give to them to maintain the relationship with that donor (increasing the likelihood they will receive another grant again in the future from them).  As stated again and again, in this post and throughout all posts in this blog, they conduct the organization such that it will be in the best possible position to succeed at its mission, grow, and continue to remain reputable (ala...yes...you know... professional best practices).

Our long existing, 'grand parent' of nonprofit operations success of the three examples, Hospice With Honor, is a sixty year old, successful, and reputable nonprofit.  Their leadership is focused on the work of the missions statement, it is a professionally operated organization, and all leadership goes through training each year (which is also weighed in a cost/benefit analysis but pays out in spades compared to its costs, because well trained and prepared leaders (executive director and board members) know how and are more comfortable networking regularly in the community and also fundraising.  The fundraising department has volunteers and staff but their efforts are bolstered by and income is increased by the organization's leaders taking their leadership position's responsibilities (in total) seriously enough (and they are trained well) so that they are committed and do the work (again, we know this by virtue of Hospice With Honor tracking and comparing costs and benefits, each fundraiser including those that only the leadership is responsible for such as the major donor campaign, the bequests campaign, and other large contribution campaigns).  This is an organization that exemplifies why best practices come to be such, knows this, and will continue to pass on to its new volunteers, leaders, executives, and staff over time the organization's value and preference to use best practices to conduct all of its operations.

I'm certain that I can sound like I'm harping, here.  I apologize if I do.  I am emphatic, though, because again, and again, specific professional and ethical behaviors and practices work for all and any nonprofit that conducts them, no matter the organizations' differing age, cause, or mission, etc.  These professional and ethical behaviors and practices (by virtue of their successes for so many different nonprofits) over time get shared and passed onto other nonprofits, those nonprofits try them out (because they worked well for others), and these successful practices bubble to the top of common practices, and become today's (and tomorrow's) "professional nonprofit best practices": because they work for so many different nonprofit organizations.

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