In case you missed the last few…..
So, to summarize the last three blog posts we’ve had on this series, the first one was “The Power of Organization”, the second one was, “Why Board Engagement Matters”, and the third was, “You Need a Plan”. If you haven’t read those yet they’re all part of what makes organizations grant-ready and competitive for grant funding so definitely go back and read through them. The last two in that series also had some free tools for you, so if you haven’t checked those out you should!
This one is all about finances and how that affects grant readiness.
A lot of nonprofits tend to think that it would be easier to go for grants as their first foray into fundraising, especially small to midsize nonprofits and startups. They tend to think that grant money is the easy money, and oh boy are they wrong! In fact you should think about this backwards. Rather than going for grants first you need to have some other things in place in order to be competitive and to really make the most of that grant funding.
I’m going to give you a simple formula to follow that is going to help you get more grant dollars in the door.
donors + events + strong stewardship = grants
Let me break that down a little bit for you.
First up in our formula are donors. You need to build a broad base of donors, and to do this you will have multiple plans of attack (mostly revolving around development campaigns). Put in place at least one campaign if you’re small or a startup nonprofit, but ideally you’re going to evolve into having a few of them to serve different needs and niches within your donor base and community.
Start with an annual campaign as your primary call-to-action for your donors.
Feel free to label that a little more creatively, but regardless of what you call it you want a signature campaign that you do every year which allocates dollars broadly to your mission and your operational funds. In addition to the annual campaign think about also implementing some campaigns that can be a little more targeted toward the audience and/or need. For example, you could run a business campaign that asks for donations from businesses in return for ads or mentions in a program, you could have education program campaigns, sponsorship campaigns, etc. Think about what you need and then get creative in finding ways to reach people who care about these facets of your organization or to whom you can offer an appropriate incentive.
However you structure things, you must intentionally build the donor base.
When I say “build the base”, you’re not going to go after just a couple of donors that are big givers. In the past I've seen nonprofits adopt a strategy of only cultivating a few high-level donors. They would get large donations in and then just be done for the year. In theory that sounds great, and sounds like a time-saver, but it’s actually a really bad strategy. What happens when these donors pass away or change their giving priorities? Would your organization be ok or would you struggle to make up that lost funding?
However, cultivating 1,000 donors who each give $10.00 wouldn’t sustain you either. Unfortunately even though we love all of our donors, that’s not much money at the end of the day. So….
What you want is a broad base of donors that run through the entire giving spectrum.
You want some big donors, you want some midsize donors, and you want the small donors, too. Don't ever turn someone away who connects with your mission, even if there's no chance of them ever donating more than a few bucks. But also realize that many small donors can be cultivated over time to give more once they really feel a sense of connection with what your nonprofit does. And, your larger donors and funders will like that you have so much support throughout all levels of the community.
Once you have campaign plans in place, don't neglect setting up a robust way to track donations.
There are a lot of different software programs out there for tracking donations and donors. Many nonprofits use Raisers Edge, which is probably the industry standard, but it’s also pretty cost prohibitive if you have a smaller budget. If you can't afford Raiser's Edge yet, consider something along the lines of Giftworks. They are not very expensive, but they are effective, and you get a lot of reporting tools and customization to help you make the most of it.
You’re going to also want to have a system for relationship building with these donors so that you can continue to cultivate this base and build them to higher levels of donations. How will you communicate with them, thank them, and keep them engaged in what you are doing is vital to your long-term strategy. If you have a development director, they should be handling this. If you don't, then I would urge you to look into hiring a professional contractor who can help you build and maintain relationships.
Now we come to the second part of my formula: events.
I’m talking about fundraising events, people. We don't need a ton and they don't have to be elaborate, but you should consider having one.
In addition to this broad donor base we’ve just talked about, you’re going to want to create at least one signature event, and possibly more (depending on your organization).
These events (or a single event) should have a goal for what kind of money is to be raised each year and what that money is for. And of course you need a plan. Who is managing this overall? Who is planning out the nitty gritty details? Who is managing the funds? Who is going to be there that night for set-up/tear-down/guest check-in, and who is handling all the various things that come along with it over the course of the planning and implementation process, etc.? You can't forget about coordinating mailings and follow-ups, RSVP’s and seating, and different things like that.
Events give people another way to create a relationship with your organization. It’s also another sustainable stream of funding for your programming or operating expenses, which looks good to potential funders.
The third part, and arguably the most important, is the strong stewardship component.
Strong stewardship is understanding that none of this money is actually yours. It was given to you to fulfill a specific purpose and your duty is to ensure that happens. It is not enough to get money in the door from donations or fundraising events; you then have to do the hard work to make sure that it is managed well. There’s a couple of different ways you do this:
- Get a good bookkeeper/accountant, whether that’s someone that you’ve hired in-house, or that you’ve outsourced as a third party.
- Make sure that you have checks and balances in place to keep things ethical and transparent. (Have several sets of eyes checking on the books and signing off)
- In conjunction with that you want to have policies and procedures governing how you’re going to manage your finances, how you’re going to record them, and who will serve as the checks and balances in your system.
- Make sure you have a way to safeguard personal information and records. If a donor sends in credit card information for their donation you must have a way to store that data and make sure that it’s safe so that it doesn’t get into the wrong hands or doesn’t just get lost because it wasn't tended to appropriately.
Only use funds for their stated purpose.
If you receive $10,000 worth of donations for a certain program, spend that $10,000 only on that program. Don't halfway through the fiscal year and decide that you want to reallocate half of those funds to something else. Always do what you said you would.
Follow up with donors and patrons to tell them how you spent their money, so they don't have to track that information down. Some organizations do this via an annual report that they put out at the end of the year. Some will do newsletters either once a year or quarterly, or on whatever schedule makes sense for that organization. Some of them will do an end of year event (which is also a great way either to invite everybody in and celebrate your successes and achievements and build buzz for what you’re going to be doing next year). Do what works best for your organization and don't be afraid to get creative in finding ways to communicate with your patrons.
Now, why do these things result in more grant awards?
Grant makers all have different priorities but you can bet that no matter what types of things they fund they are all looking to tick off the following boxes:
- Is the program structured for success?
- Is the nonprofit run well?
- Is the board engaged?
- Is the program sustainable?
- Does the organization have other sources of funding for their day-to-day operations as well as their individual programs?
- Does the nonprofit manage their resources well? Do they have a track record that indicates they are deserving to be trusted with funding?
- Can they measure their impact?
Bottom Line: donors + events + strong stewardship = grants
If you do all of these things as part of an overarching strategy and work the formula then you will ultimately get more grant dollars in the door. If your organization is currently neglecting one of these areas and you have not been winning grant awards, it may be time to take a big-picture look at your overall approach to funding. And if you aren't sure where to start, definitely ask other nonprofits or call a pro who can assist you.
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