June 16, 2014

How to Match Your Needs With Income Opportunities

At a nonprofit that serves the homeless, it’s Chris’s 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 conclusions, 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 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 and 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. You can obtain many items or services multiple times. Generally, in-kind requires minimal paperwork.

How to Grow: Study your expense budget. Identify items you purchase or would like to buy that might be donated or obtained at a discount. Identify individuals with a connection to those needs—request help. For maximum impact, focus on the most significant 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 a chance. However, most grant programs favor:

Pilot programs
One-time investments, 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 raise $250,000 annually from such a list for over five years or 7 percent of their cash budget. 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 would like to run (i.e., that fit within your mission strategy.) When funded, they allow nonprofits to serve more people and provide most of the money needed.

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 several 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 the 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 to 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 the mission. Sector-wide this is the largest source of nonprofit income.

How to Grow: Provide services, either mission-related or not that offers value to individuals, corporations, or other entities.

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. The first maximizing income guideline for many nonprofits is this: If the end-user can afford to purchase it and it’s appropriate, charge them.

You have multiple opportunities to obtain income. When the above conditions are met, maximize your revenue, 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.

This post is from our free monthly newsletter, Added Value. Subscribe to Added Value here.

income

Author

Karen Eber Davis

Karen Eber Davis provides customized advising and coaching around nonprofit strategy and board development. People leaders hire her to bring clarity to sticky situations, break through barriers that seem insurmountable, and align people for better futures. She is the author of 7 Nonprofit Income Streams and Let's Raise Nonprofit Millions Together.