Jackie studies her current year’s funding projections and groans. Again, they’ll need an emergency year-end appeal to avoid a shortfall. She pounds her fist on the table. It’s the last time! This deficit is it.
Next year, she vows it will be different. Twelve months from now, this nonprofit will have the funding it needs to avoid this yearly crisis.
Money. Not only is it desirable, but it’s also essential. To cover the impact of inflation and fulfill your mission statement, your nonprofit must earn more. Have you, like Jackie, decided enough is enough? Perhaps you avoid eleventh-hour drama like Jackie but need to raise more funds. Whatever your situation, obtaining more income starts with knowing that it’s possible. This three-part post outlines them. It offers a quick map of your journey. To illustrate the steps, we’ll follow Jackie, a nonprofit executive director with a five-year track record of providing service to her community. Like Jackie, the seven steps will help you create the revenue your nonprofit needs next year. We start with two thinking steps.
The first steps to earning more money involve establishing a conducive mindset.
How much money do you need? Financial success starts by naming a specific amount. To calculate this, you estimate what you want and what you need. Specifically, you need funds to meet your budget. You need money to cover inflation, fix challenges, and launch new initiatives. Your ideal funding goal is usually an optimal combination of wants and needs. What would be an ambitious but realistic bottom line for you next year? Give this thought. My clients find it helpful to determine three future budgets: a must-have number, a wanted number, and, after some consideration, their goal.
For more on creating a realistic budget, read Set Realistic Nonprofit Fundraising and Income Expectations.
Jackie contacts her budget officer and staff for suggestions. She queries the financial gurus on her board. With this advice, the agency establishes a budget for next year. This figure is three percent higher than the previous year. She needed a one percent increase and wanted a five percent increase. Jackie’s vision is that in one year, she, her staff, and the board will use their energy to celebrate and plan for the next year instead of conducting an emergency campaign to avert the traditional fiscal disaster.
Believe that your nonprofit cause is worth funding because of the value you provide to the community. Believe you can solve your income challenges. To make this concrete, calculate your value.
Nonprofits have the potential to offer tremendous value. Translating your value into dollars will help you believe that your vision is possible. This calculation is not la-la-land thinking but a belief based on facts upon which you act. With effort, work, and investment, and by continuing to identify and provide value, you see it is possible that you can achieve your goal. Stay with this first step until you believe your vision is possible. Recalibrate your budget if needed. But take care here, you need to believe it is possible, and those around you also need to think that your budget is realistic.
Let’s look at what Jackie did. She listens to her staff, board, donors, and volunteers. She asks them to share three-income successes and three areas to improve. She asks if the proposed budget is realistic. In the end, almost everyone agrees that a three percent growth budget is possible and desirable. She talks to her successful peers. She learns that they expect to increase their funding next year. Two agree to support her during the year, help her improve her skills, and remind her that the goal is attainable if she becomes discouraged.
While related to belief, optimism is more. It’s a mindset that reflects your confidence about your power to influence the world. An optimistic attitude is like donning a pair of glasses. The lenses affect how you interpret the world and your work. Use your realistic optimism to shape your thinking. Vietnam Prisoners of War, who embraced uncertainty (we don’t know when) and faith (we will get home), survived. Others perished.
To earn more money next year, be optimistic about the outcome. It will be challenging, worthwhile, and effective. Even if you meet your goal in 367 or 500 rather than 364 days, the outcome is way better than not making your goal. Follow the model of Vietnam prisoners who survived. Embrace uncertainty and mix it with hope. You will get there. You just don’t know when.
Jackie considers her thinking. She has been with the organization for five years. Each December, they faced a budget crisis.
Jackie decides that this is a behavior that she can lead the charge to change. She lists the revenue commitments already made for the next year and realizes they are already ahead of last year. She believes meeting their budget is possible and is optimistic that they can do it with focused effort. At her regular meeting with her board chair, she shares her thinking. He agrees and points out that they have a five-year-old habit that they will have to replace with a new one by acting differently. He agrees it’s worth a multi-year effort if that is what it takes. He decides to keep the challenge on the board’s regular schedule.
Jackie’s successful nonprofit organization is well on its way to earning more funding next year. For Jackie and you, clear and tough thinking is a critical start. Much lies ahead. In the next section, we will share the practical steps to take to earn more money next year. These start with securing current funding.
In the last section, we learned with Jackie, a nonprofit executive who experienced five years of fiscal crises at her nonprofit organization. Jackie commits to stopping this yearly emergency. Part I shared the necessary mental frameworks. With these in place, we now turn to two practical tasks.
To earn more, first, you know your vision, your starting place, how you will get to your vision, and the help you will need. Since you won’t make more money next year by yourself, plan how you will engage others both for ideas and help. You might start with your finance committee or another small team you pull together for this effort and, from here, decide how you will make this an all-hands-on-deck effort.
Others will have questions. To prepare, look at your current income. Where are you now? What does your funding look like? Draw income pies or other easy-to-decipher visuals. How did you get here? What trends exist in your contributions, grants, earned revenue, and other sources? What funding efforts proved most productive?
Jackie meets with her finance staff. Sharing her commitment to earn more, they review current funding streams to look for trends and opportunities. (See Can Your Organization Obtain More Income? The Seven Sources.) Since Jackie and her team know they won’t make more money next year in a small committee. They plan how to educate staff, board members, and key stakeholders about their funding needs.
They prepare to answer questions. What is happening with their revenue? Which sources have been growing? Which declining? What payoff do they see for recent fundraising efforts? What signs of growth, such as more small donors, do they see that will help the budget–but haven’t happened yet? To illustrate and share the data, they create funding pies for the three budgets Jackie drafted, tweaking with what they learned.
You want to grow your income. To do this, start by maximizing your current income streams. Begin your efforts by ensuring you are doing a good job with your current donors, funders, and sponsors. Often this will mean prioritizing filing reports, thanking donors, and stewardship tasks. This supports continued income from existing funding sources. Big picture, these efforts lay the groundwork for next year’s income, and you can stand out by making it a priority to accomplish any needed tasks. Few of your nonprofit competitors prioritize these efforts.
For instance, Feeding Children Everywhere has nineteen sponsored food-packaging events. To stabilize funds next year, they seek to renew all sponsors again. Why would sponsors want to sign-up again? Because of their great experience this year.
How are you stabilizing current funds? Review your current contracts and relationships. Are you fulfilling them energetically? Evaluate the odds of obtaining the same or similar funding next year. What steps support this? Decide on actions to take. Schedule them.
Jackie gathers her development and finance staff for stewardship discussion. During it, they review their current funding sources. They review how to engage them and the benefits each funding source receives from their relationship. They develop follow-up steps for neglected entities. Jackie assigns the development staff to create “engagement checklists” to systematize interactions with investors, donors, and customers. (Click here for an example of a checklist for grant opportunities.)
Successful nonprofit organizations pick one new growth area to increase funding. They focus. The Florida Center For Child and Family Development, for example, starts a learning institute to reach other providers who can benefit from their knowledge – a mission earned income approach. You can decide to increase donations, business revenue, government funding, grants, or earned revenue. (You can even decide to grow in-kind to reduce your cash expenses. This technically won’t grow your revenue, but more in-kind might provide a substitute money you would otherwise need to spend.)
Finding one place to grow your revenue has the potential to replace dwindling resources and beat inflation. Commitment to growth fuels hope. Even if you face funding challenges now, growth helps people believe, “Things will get better.” Growth points lead to new skills.
Once you identify how you increase income, decide the steps needed to move toward it. What are the next steps you will take today? What will you invest in? What resources do you need? Explore and answer questions like these to activate your revenue growth.
Jackie’s organization decides to increase individual donations. They ad an annual appeal and set a goal to double their donor list. The board chair will lead the charge for increased board giving. A former board chair agrees to head a task force re-connecting with former board members and reengaging them in the organization’s future. Jackies sets aside time in her calendar to visit major donors every week.
With these practical steps behind her, Jackie feels more confident about earning more funding next year, and you should too! Even though Jackie is crazy busy running this year’s emergency appeal, the time she dedicates to More Money Next Year already encourages everyone. She, her staff, and the board are more focused on funding.
To arrive at More Money Next Year requires changes in thinking, time investment, and actions. The following section follows Jackie as she creates solid plans and takes action to close the gap between what she wants to earn and her current funding.
The bridging the gap step is key to your efforts to earn more funds next year. How will you move from here to the place you seek? What tactics will you use? How will keep the enthusiasm going after the panic of this year’s near financial disaster wanes? What specific actions must be done to move toward your vision? To complete this step, determine a sequence of events that moves you from where you are now to the income you seek. You cannot successfully assign this to a committee, although a committee’s advice helps.
After her preparations, Jackie outlines a triple approach to reach the three percent funding increases established earlier. She decides to close the funding gap with a one-percent funding increase in:
1. Individual fundraising
2. Fees for services, and
3. Grants that help them streamline operations.
Reality Test. Check The Plan.
Will the bridge to your vision really bring you to your desired destination? Or are you building a bridge to nowhere? Will the bridge, as designed, carry adequate traffic? A bridge made out of marshmallows may be pretty and interesting, but it will fail with the first rain. What is a marshmallow bridge? One you make out of sweet ideas that vaguely resemble reality, like a plan to build a $10 million structure when you’ve not raised your first $100,000.
Jackie knows it is not only necessary to do the right thing; it is necessary first to know what the right thing is. Jackie needs information on their fees for service to implement changes soon. Aware of her limits and the benefits of an outside perspective, she approaches a board member with a passion for “making good business decisions” to underwrite a consultant to advise her on the reality of her plan, coach her, study their fees, and help them to identify their best new funding opportunities. The feedback from the consultant’s analysis confirms the plan. Her bridge is solid. It will lead the organization to more money next year.
You will be busy. Your busyness is the reason it’s critical to know your essentials; your North Star. Knowing your essentials will help you to know if you are on track when you pause and gaze up. What are your essentials? Be specific. One organization that sought to increase individual funding identified these “musts.” The number of contacts added to the mailing list, people “touched,” and individuals asked face-to-face for specific donations.
Jackie develops three touchstones. These are movement on the fee for services project, dollars of requested grants that will help her reduce operating costs long-term, and the number of donors she thanks, touches, or requests funding.
Schedule time on your calendar. Invest resources. Once scheduled, follow Nike and Just Do It. One expert, for example, advises that planned giving can be accomplished in two hours a week. I find this brief period a challenge. Nonetheless, in one personal project, to date, two hours consistently applied over three months has yielded consistent weekly marketing to 200 people and a committee with growing planned giving skills.
As the year begins, Jackie’s plan to earn more money next year becomes earning more this year. Jackie schedules four one-hour blocks of time in her calendar each week. While, over time, these hours get nibbled at like a cheese block surrounded by hungry mice, her consistent effort is enough to create improvement.
Are you on track? How will you know? Evaluate often—but simply. Do not wait until the end of the quarter, like school grades. Instead, assess your progress at least monthly. What do you check? Focus on your North Star essentials. Schedule 30 minutes once per month. Then, for fun, challenge yourself to complete it in 20. Record this time in your calendar now, for the next twelve months.
Jackie sets up a monthly chart that she sends to her board and shares it with her staff. It takes her an hour to develop and fifteen minutes a month to complete it. She measures and reports on her North Star essentials. As the year continues, she adds details: the amount of time invested with donors individually, the number of telephone calls made, and whether the calls were successful or not. She also includes an “asked for money,”—indicating conversations that proceeded deep enough to request funding. The staff copies her model and creates similar charts. This keeps them on track. It changes the organization’s conversations. They now focus on mission and funding instead of budget fears.
By mid-year, Jackie’s nonprofit organization had doubled its requests for grants. One funded grant provides resources to reach fifty new paying customers. The consultant’s recommendations regarding earned revenue are underway. She and Jackie continue to explore ideas and make small vital changes. While Jackie never dedicates as much time as she wants to individual donors, her hours are greater and more consistent now. The mailing list and volunteers continue to grow.
To fulfill your plan or any great endeavor, you must learn more. For example, if you seek corporate sponsorship, identify the industries most likely to sponsor your efforts. Talk to people in that industry. Read their trade journal. Subscribe to e-newsletters that focus on sponsorship activities. More generically, gain knowledge for now and in the future. How do others obtain a source of funding? What has succeeded? Obtain new knowledge, think, and decide how you apply it.
As the swift-moving stream of information flows by her, Jackie reads, highlights, and takes notes on everything about individual giving that crosses her desk. At year-end, she has a notebook full of tips that she is using and is an idealist about growing a culture of philanthropy.
Do you need help with this? Most groups don’t. YOu might if you never slow down and appreciate your accomplishments, and thank (again) everyone who helped. The destination is lovely, but the journey is essential, too.
At year-end, Jackie’s organization reaches its funding goals. Jackie sends a handwritten thank-you note to everyone and a general letter to request a year-end gift to celebrate the success. The letter raises $5,000 over their budget. Jackie dedicates every penny of it to raise more money next year.
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