At a nonprofit that serves the homeless, it’s Chris’ job to grow new nonprofit revenue. When he examines the opportunities his nonprofit can offer and the needs he’s trying to solve, he’s puzzled about how to proceed. “Who is most likely to fund each need?”” he asks. “How can I determine whether to ask for a donation, request a grant, or seek a corporate sponsor? What is the best way to proceed to maximize revenue and our partnerships?”
This article provides a recommended process to solve his puzzle and yours, that is, how to determine whom to ask for what, from first to last. (In the conclusion, you’ll find the assumptions made –and there are several–to develop this process.)
Maximizing Income Guide #1: Seek In-kind Gifts
What to Request: Seek items you currently purchase that can be accepted as donations or obtained at a deep discount. Consider consumer items such as clothing, food, and toiletries. Ask your partners to help you score deep discounts. For instance, medical offices don’t buy bandages from big box stores. Instead of spending hundreds on bandages, seek someone in the healthcare to donate or help you to purchase bandages in bulk.
In-kind includes volunteer services. Here, identify meaningful work that a volunteer might do. It’s common to ask for someone to manage the front desk, but also ask a volunteer to help your staff get more efficient at computer skills once per month. Ask a graphic artist to spiff up a brochure during their lunch hour, with the bosses permission, of course.
Budget Impact: Reduces the need for cash in a nonprofit. Items or services can often be obtained multiple times. Generally in-kind requires minimal paperwork.
How to Grow: Study your expense budget. Identify items you purchase or would like to purchase that might be donated or obtained at discount. Identify individuals with a connection to those needs. Request help. For maximum impact, focus on the largest expenses. Using this approach, I mobilized a nonprofit to identify $70,000 in in-kind opportunities. They made plans to obtain the items and services and renew them annually.
Why Donors Help: People like to donate tangible items. Others are willing to help you by shopping for bargains for you when they understand what you need.
Maximizing Income Guide #2: Compete for Foundation and Corporate Grants
What to Request: Each grant opportunity achieves unique goals. Theoretically, any of your expenses might qualify for an opportunity. However, most grant programs favor:
- Pilot programs.
- One-time investment, especially those that reduce future spending, such as buying iPad’s for in-the-field staff to reduce their need to be at the office to file paperwork.
- Capital items, including buildings, vehicles, and equipment.
Budget Impact: Increase donated income—usually one time only. Future funding requires new concepts. Over time, repeat opportunities are often available. The paperwork varies, as does the revenue.
How to Grow: Develop a grant list. Monitor it monthly. I helped another nonprofit to raise $250,000 annually from such a list for over five years or 7 percent of their cash budget annually. To develop your list, collect potential sources, using the Foundation Center database. Supplement this with local knowledge, research, and opportunities offered by request for proposals, known as RFP’s.
Why Donors Help: Every foundation and corporate giving program has unique goals. These goals may be overtly stated on their websites, deduced from their funding or, best yet, identified in conversations with them. Assume that all corporate giving programs prefer positive branding.
Maximizing Income Guide #3: Pinpoint Government Opportunities
What to Request: When well-matched to your nonprofit’s programs, government contracts pay for operating expenses for programs you already operate or you would like to operate (i.e. that fit within your mission strategy.) When funded, they allow nonprofits to serve more people and provide most of the money to do so.
Budget Impact: When available, government opportunities provide seed money for new activities and operating funds for tried and true programs. Government funds require extensive paperwork and when successful offer significant funding.
How to Grow: Check for funding at all levels of the government—national, state and local. Don’t forget to explore regional bodies for opportunities. For instance, Florida’s water management districts have micro-opportunities for conservation education. For upcoming legislated opportunities, join and then read publications from your associations. Most are excellent sources of income opportunities. Finally, the perseverant seek legislators to sponsor budget line items.
Why Governments Help: Government programs exist for a number of reasons including the common good, voter demand, and recognized needs best solved by nonprofit organizations.
Maximizing Income Guide #4: Expand Individual Cash Donations
What to Request: Needed items, not supported by the above income streams.
Budget Impact: Cash income. With proactive stewardship, individual gifts can be annual and grow. The paperwork varies, as does the size of the funding. No upper limit on this income stream exists.
Different types of individual gifts have different budget impacts:
- Designated Gift: These donations are given to solve challenges your donor identifies. Services for children, young animals, and basic needs are common. You can do much better. Find the right donors. Based on your shared values, match them to the right need—a process that is easy to write about but which requires discipline to achieve.
- Undesignated: Like earned income after expenses, you can use undesignated donations to purchase any item that serves your mission. Here is a good test for appropriateness of spending donated dollars: Would the donor be pleased with the investment?
How to Grow: Develop a lengthy supporter list. Offer them opportunities to gain value from you and build relationships with them. Ask for their support, ideas, and, eventually money. Invest time with people who have a passion for your cause and financial means in face-to-face experiences. Involve others, especially staff, board members, and volunteers. I helped one client expand individual donations by 30 percent with a customized, half-day staff retreat and follow-up.
Why Donors Help: Studies show that donors contribute for a handful of common reasons. These include giving back, making a difference, and because they were asked. Besides these generic concepts, if you seek to grow your donations, identify the top three reasons why your donors give to you. See Nonprofits, Why Do Donors Give You Money? (video blog) for one group’s answer.
Maximizing Income Guide #5: Pay for All the Rest with Earned income including mission, corporate, and other revenue
Budget Impact: After expenses, use these funds to purchase needed items or services for mission. Sector-wide this is the largest source of nonprofit income.
How to Grow: Provide services, either mission related or not that offer value to individuals, corporations or other entities.
Conclusion: Whom to Ask For What
Growing your income depends on:
- Your potential partners. Healthy nonprofits have a collection of corporate, foundation, individual donors, government, and earned revenue opportunities.
- The size of the need. It is unlikely a single partner will buy your new building, but many of them might buy a new oven for you.
- Timing. If you need a new air conditioner this summer, you can’t wait for a December opportunity.
- The nonprofit’s income strategy. If you seek more individual donor income, you may choose to forgo government, corporate or grant opportunities and reserve items with high crowd appeal items to engage first-time donors.
- The best fit for the item. Bok Towers Gardens threw out these rules and sought earned income for tours of its 1929 Mansion. (Read their earned revenue story here. ) This made great sense. Ticket purchasers enjoy the benefit of the tickets. For many nonprofits, the first maximizing income guideline is this: If the end user can afford to purchase it and its appropriate, charge them.
You have multiple opportunities to obtain income. When the above conditions are met, to maximize your income, expand in-kind, pursue grants, and seek government opportunities. Then, design individual donations. Fund everything else with earned income. You can maximize your income. Fit together the different income streams into a coherent whole.