Funding Sources & Donors

Funding for nonprofit organizations comes from a variety of sources. In general, the greatest is the individual donor. But there are foundations, corporations, governments, and other grant-making organizations.

A nonprofit needs to understand where its best chances for funding reside. Then it needs to know how best to reach the sources, both individual and organizational, likely to respond to its mission and appeal.

Articles about Funding Sources & Donors

Single Women Fundraising Sweet Spot

Nonprofits should reach out and develop a base of support among single women, and a social-media strategy should be an important part of that effort. The evidence for both the importance of unmarried women as donors and social media as a key way to interact with them lies in a mashup of data from three sources: US Census Bureau Lilly School of Family Philanthropy 2010 Women Give study Website Magazine report on social media use by men and women In its broadest sense, a mashup is the combining of content from different sources to reach a new or deeper understanding about a subject touched on in part by each of the original sources. The three sources used in this mashup provided the most recent data and conclusions readily available. And while some of the data may be six or more years old, I have no reason to doubt its continuing validity. Taken together, the three sources support the conclusions that: Single men and women are a major segment of US population. Single women are more inclined to give than single men. Single women who give will generally give more than single men who give. Significantly more women than men use social media, use it more often, and engage with it more deeply. The underlying data that support those conclusions make an unassailable argument for developing and nurturing an identified donor base of single women and for using social media to do it. Single Women Are an Important Group and There are More of Them than Single Men According to the US Census Bureau 44.1% (103 million) of the adult... read more

What To Do When Foundations Have Walled Themselves Off from Your Organization

Reaching out to foundations that have predetermined your organization is outside their area of interest can be challenging, and doing it wrongly can close doors forever. Private foundations are mandated by law to give away a certain percentage of their assets each year, but they can give their money how, when, and where they choose. That’s why some foundations can have a “give only to preselected charities” policy. It’s their money. As fund-raisers we need to honor the wishes of these “walled-off” foundations. Yet, for the good of our organizations, we find ourselves searching for ways to form relationships with these “potential” donors in hopes of becoming one of their accepted few. As we attempt to span the gap between their giving policy and our need, we have to do so with integrity and delicacy. After all, we’re trying to build a bridge not burn one. A major complaint I have heard from foundation officials over the years is that grant seekers are often either oblivious to a foundation’s established grant eligibility requirements or they ignore those guidelines. Those are both big mistakes. So, what can you do when face to face with a wall built by a foundation to keep organizations like yours out? Is there a way you can make justified and meaningful contact with these grant makers and not violate their rules? The answer is yes. It has been done. How do you do this? Use Direct Leverage of Key Stakeholder Associations While some grant makers deal only with their favored, preselected charities, even refusing to accept proposals from others, you can be pretty safe in... read more

Can One Non-Profit Donate Money To Another?

I was asked if one 501(c)(3) non-profit can give money to another 501(c)(3) charity. With the usual, and necessary, caveat of, “I am not attorney, nor am I giving legal advice,” I responded that, Yes, when the transaction advances the donor non-profit’s charitable mission, a non-profit can donate money (and other resources) to another non-profit. In some instances doing so is an essential part of a non-profit carrying out its mission. Example: An orchestra could donate funds to an organization which seeks to develop overall marketing and PR education and outreach to that city’s arts and culture population. Along with that necessary start to the process, the donor non-profit needs to make absolutely certain that there is: No conflict of interest. Any person or persons responsible for the transfer of the donated funds must not personally (their families, friends, associates, etc.) benefit in any way. Example: The donated funds are used to purchase equipment in some way connected to business interests of a Board member of the donor non-profit No violation of donor restrictions. While exacting restrictions are not generally connected to most donations, nevertheless, the risk is that some donors would not approve of their money, in principle, going to another charity they did not choose, no matter how it fits or how worthy. No misuse of the donated charitable resources by the receiving non-profit. Should the receiving non-profit subsequently have publicized financial problems, even though the donated funds were not in fact misused, the overall perception of the receiving organization trumps the reality. Perception is everything. There could be serious trouble for the donor non-profit requiring it... read more

Donor List Selling or Exchange with Other Non-Profit Organizations

Many non-profit organizations exchange with other non-profits their mailing lists of people served, i.e. their clients, users, patrons, etc. They do this for marketing purposes, especially in the arts and culture world. And it could be said it is a good thing, in the spirit of cooperation and public service. But all too often the exchange, or even the sale, of nonprofit organizations’ donor listings is practiced. This is a much different method of mutual support, and it has its consequences. To many of us, such selling of our donors’ names and addresses would, in essence, be a “selling out” of our donors. It’s probably safe to say that most of them would take a rather dim view of this practice. And to seek the permission of the donors to allow their names to be widely and randomly distributed would be an exercise in futility. Many of an organization’s donors were initially brought into its donor base by board members, other volunteers, donors and staff. Those donors are cultivated, solicited and maintained in an organized program of stewardship. Any within the organization’s “family” would most likely be dismayed, even angry, should the names and addresses of the donors they brought into the fold be sold to another non-profit organization. We can only imagine their reaction should the organization begin to lose or receive less money from donors as a result of sharing their names with other charities. These days, more and more unwelcome “cold” solicitations are being made through telefunding and direct mail programs to individuals due to the sale and exchange of donor lists. Consequently, these individuals are... read more

Pro Bono Services for Your Organization

Pro Bono: “Especially for the Public Good” (Merriam-Webster) The dictionary definition of pro bono fits well with non-profit organizations, which themselves are also for “the public good,” according to the IRS description of how they must be created and operated. And the good, in the case of pro bono work, is what countless non-profit organizations have received from generous businesses and firms as contributions of legal work, accounting, printing, and much more—all of which help to reduce operating and special expenses the organizations would ordinarily need to pay, even to help make funds available for things they would like to do, but could not otherwise afford. The result is to help relieve the strain on the requirements of their annual fund and other fund-raising campaigns. Much of the pro bono work donated to non-profits by businesses and firms is direct and uncomplicated. Such work can be evaluated in terms of making exacting legal decisions, having accredited year-end audits, producing workable long-range plans, executing successful searches to fill management staff positions, etc. Free But Maybe Not Acceptable However, it is another matter entirely when it comes to pro bono work requiring creativity, such as art, design and writing: when the pro bono work is for a non-profit organization’s annual report, mission-oriented institutional publications, marketing and PR publications, other media (such as radio and television, website development), and especially for the materials and communication resources which drive fund-raising campaigns. All of these pro bono services are the direct result of the creative and artistic minds of others from advertising and related agencies, whose creative personnel usually are not closely enough associated... read more

Solicitation of Vendors

A non-profit organization’s intention to solicit its vendors for cash contributions in support of its general operating campaign or a capital building or renovation project has a number of unique twists and turns which must be considered in detail before asking for the money. Soliciting a charitable gift based on a prospect’s wish to support something of personal value and for what is good for her or his community is a purely philanthropic act, and it is a vastly different transaction from a non-profit expecting a donation based on a business deal because a company or firm sells products or services to the organization. This latter situation could cause people within a non-profit to want to exert pressure—sometimes unfair—on vendors to make contributions. Along with the caveats cited in this article for greater sensitivity to the vendor solicitation issue, it should be kept in mind by those exerting such pressure, that the organization is, after all, getting something for its money from the vendor’s products or services. The Challenges of Determining a Meaningful “Suggested Ask” Determining a suggested asking amount for each vendor will most likely be a guessing game. Yet setting a reasonable and accurate contribution amount is essential. Otherwise, simply asking them to contribute “something” is like raising money in a vacuum. Most prospects, including vendors, at least on the surface, will welcome and better understand a suggestion of what would be an appropriate contribution for them to make. There is one unique reason for finding it difficult to come up with a meaningful suggested asking amount for a vendor’s contribution of cash relative to the business... read more

Challenge/Matching Gift Programs for Your Fund-Raising Campaigns

Challenge Grants Can Multiply Your Success Challenge grants are indeed challenging to fulfill, and once secured, they are unusually rewarding opportunities for non-profit organizations to greatly energize and enhance their fund-raising campaigns. They can significantly increase the chance to raise more money than would be possible otherwise. Challenge Grants may be utilized to jump-start a campaign, or as a mid-course correction to energize a flagging campaign. The best thing to know about Challenge Grants is that they almost always are a required key element of capital and endowment campaigns, but are equally effective and productive when they are employed in annual fund, sponsorship and underwriting campaigns. From Whom and for How Much? To help identify a potential Challenge Grant donor, your best source is your Board of Trustees. Perhaps one of your Board members has the financial capability to lead a challenge, or knows of another individual, company, family or community foundation that has such potential. It is always best to identify several possible donors in priority order. The amount of the Challenge Grant request will depend on a variety of factors: The need: based on the Fund-Raising Campaign Goal. The rated capability of the Challenge Grant prospect. he rated potential of those in your donor base from whom you will seek matching funds. Do you have reasonable certainty that you can match the challenge dollars at least on a one-for-one dollar ratio? Based on your fund-raising potential as indicated above, you can determine if you will seek the usual one-for-one (dollar for dollar) match, or increase the ratio to perhaps, one-for-two, or even one challenge dollar for every... read more

Corporate Matching of Employees’
Gifts to Your Organization

A number of resources provide listings of companies having gift programs that match contributions made by their employees to non-profit organizations. According to the grantor’s guidelines, such matching funds could be general in nature for support of almost any type of accredited non-profit favored by an employee, or a company might limit its matching funds, say, to education. Often, a company has a maximum limit to funds it donates in this way to a given nonprofit organization during a single year. Through your research from libraries and on the Internet, such commercially available lists and those harvested by nonprofit associations, such as CASE (Council for Advancement and Support of Education), can be reviewed for possible value to your organization. Look Only or at least Mainly to Companies Operating in Your Area of Service You will need to be selective and temper your expectations when consulting listings of companies matching the gifts of their employees. These general and geographically-wide lists of companies with matching gifts programs may be of very limited use to community organizations. What counts most is that any companies that match gifts of employees who make contributions to non-profit organizations must have some facility or operation in the geographic area served by the non-profit. Thus, it would do no good to present to your donors a list of companies that have no business interests or employees in your area. No business in the area—no employees—no matching gifts. So, let’s narrow the search for those companies which have matching programs, and which operate in your area. How do you identify the companies in your area with matching programs?... read more

In Search of the Elusive Major Giver

What a Major Giver is How to find them What you need to have in place before conducting a Major Gifts Campaign Your organization needs money. Big money. The kind of money you can’t raise by going out and asking for donations of $10, $20, $100, or perhaps even $1,000. Maybe you need the money to expand your services. Maybe you need it to build a new wing. Maybe you need it to match the largest grant you’ve ever been awarded. Maybe you need it just to stay alive. Raising big money is a different proposition from chasing down contributions to the annual fund. Let me draw an analogy. Money is the sustenance that nourishes an organization. Just as food nourishes our bodies, money keeps the organization alive, healthy, and growing. It is the lifeblood. The great majority of us get our food in restaurants a meal at a time and from grocery stores a bag or two at a time. That’s not unlike what we do in most of our fund-raising efforts. We go after small money—enough to keep us going for a cycle. That cycle can be measured in time—a few months or a year. Often it is measured conceptually—a specific project or program. Raising big money is more like growing our own food and then preparing every meal from scratch. That means we’d have to clear the land, plow the ground, plant the seeds, cultivate the crops, harvest the yield, and store it. And that’s if we’re vegetarians. I don’t even want to think about what I’d have to do for a steak. The point I’m... read more

The Fallacy of Financial Ratios: Why Outcome Evaluation Is the Better Gauge of Grant Worthiness

Talk of developing a system to evaluate the sustainability of non-profit organizations has been on the rise. Centered around measuring outcomes in terms of percentages or ratios, the goal of such a system appears to be twofold: To create a filter that will allow grantmakers to quickly assess and compare the overall ability of non-profit organizations to manage funds and deliver results. To express those assessments as a numerical ratio that will rank the worthiness of non-profits as grant recipients. Calls for hard measurement of non-profit organizations’ efficiency have been made before, but I can’t remember a time when the voices doing so have been so loud. Attendees at a major conference heard the CEO of one of the United States’ largest foundations say that he is looking for a financial ratio to employ in the review of grant applications. The CEO of a major website serving non-profit organizations has publicly expressed his intent to create a numerical approval ranking system for the hundreds of non-profits listed on the site. A state association of non-profit organizations announced that the organization was planning to implement numerical “performance standards,” and that the association was going to “raise the bar” for non-profit organizations in order to judge “whether or not they were doing a good job.” From the statements I’ve heard and the comments I’ve read, it would appear that funders are in search of a litmus test for grant worthiness. An organization that fails to score high enough would be out of the box — automatically ineligible to be considered for a grant. One that fell within the box would then... read more

Your Organization’s Next Special Event:
“Fund-Raiser” Or “Friend-Raiser?”

Should a special event be focused on making friends for an organization or bringing in money? On the one hand, every organization needs friends to help promote its mission and to be there for future fund-raising needs. But on the other, there are bills to be paid today. I believe that the short answer is to go for the money today! Putting on a special event is a substantial effort that requires the dedication of important resources. Those commitments should be made only when the primary goal is to make money. When properly conducted special events can be a valuable source of additional contributions that complement a nonprofit organization’s traditional fund-raising campaigns. They also can be a way to increase volunteer involvement with an organization, resulting in a larger pool of more committed volunteers to draw upon for future fund-raising campaigns. Special events can help publicize and promote an organization, and they can be useful tools for developing public awareness of an organization’s contribution to the community. But that should all be secondary to the goal of raising money. By focusing your special events on fund-raising, you make the measurement of their success clear-cut. By not trying to accomplish two or more differing goals, developing a plan for a special event becomes an exercise in getting from point A to point B by the shortest route possible. A special event with the straightforward primary goal of making money is a special event much more likely to be successful. Key Criteria for Successful Fund-raising Special Events They make significant amounts of money. They have a high ticket-price structure. Tickets are... read more

Cultivate a “Grass-Roots” Fund-Raising
Campaign for Your Organization

Many non-profit organizations serve individuals who pay very little or who are unable to pay anything in the way of fees for the services they receive. They generally are in no position to give even the smallest donation to their organizations’ annual fund. In all instances those client/user groups are grateful for the good being done for them and their families. They quite often ask if they can do anything within their power and means to show appreciation to their service organizations since they have no money to give to them. Leaders of those non-profits want to know how best they can respond when at the times the people whom they serve say, “I know you need money and I want to help. Is there anything I can do?” I have found many such individuals were able to solicit small donations from their immediate family members, other relatives, friends, co-workers, and from other sources personal to them. They responded well to plans presented to them by their organizations’ development officers and trustees. Perhaps your organization can do the same by employing a model of such a program I have used a number of times with success. However, you should present the idea only when your clients or users of your programs and services enthusiastically volunteer their support. And, most important, you must be absolutely certain there is not even the slightest misperception that the quality and frequency of the services they receive from your organization are at all influenced whether or not they engage in fund-raising activities. Some Non-Profit Organizations Have Successfully Adapted This Type Of Campaign Individuals enrolled... read more

Should Your Organization
Sell Products & Services to Raise Money?

I am made increasingly aware of the conflict non-profit organizations experience when faced with choosing between: Raising the money they need using a traditional philanthropic process. Making a profit from selling and endorsing commercial products and services. The number and variety of selling opportunities presented to non-profit organizations, especially through the Internet, is growing rapidly. All too often, the advertisements for those products and services make outrageous and misleading promises of big and easy money to needy and vulnerable non-profits. There is nothing wrong with selling a commercial product or service to help support a non-profit organization if: The time expended can be justified by the profit gained. It neither restricts nor replaces the far more effective and time-proven philanthropic process—a process that has seen billions of dollars raised over decades of time. An organization institutes a product or sales program as additional and complimentary to their regular fund-raising, not as a replacement or alternative to it. “Girl Scouts Can’t Live on Cookies Alone” Raising contributed income for non-profit organizations requires much more than selling commercial products and services to make money. Such programs have their place, but most organizations simply cannot generate enough income from them to meet all their needs. A number of years ago the Girl Scouts proved that point with their highly visible campaign to let the public know that “Girl Scouts can’t live on cookies alone,” and that the organization required additional major support in the form of philanthropic contributions. Selling products and services to generate income seems an easy way to make money. Some commercial vendors of products and services even tell their... read more

Tapping the Philanthropic Well

Principal Fund-Raising Myth It’s common knowledge that corporations and foundations give most of the money to non-profit organizations Principal Fund-Raising Truth You go where money you think you can get is to be found in the greatest quantities and most of the time that means you look to the individual donor No fund-raising campaign should ever be started until you have identified the sources from which you will draw contributions. Sources here does not refer to specific potential donors, but to the six categories of donors who contribute money to non-profit organizations. They are: Trustees Of The Organization Individuals Corporations Private Foundations Community Foundations Government Your plan for a fund-raising campaign should target each source appropriate for that campaign and set a goal for contributions to be achieved from that source. Those goals are determined by rating and evaluating the potential donors that comprise each source. Trustees All fund-raising campaigns begin with the trustees of an organization. In general, if you are planning a fund-raising campaign and are not expecting important contributions from your trustees, there is something drastically wrong with either your campaign plan or the composition of your board. Trustee giving sets the pace for any fund-raising campaign, and your board should have on it persons ready, willing, and able to make their best possible gifts to the organization. A board of trustees is a resource for an organization to draw upon in carrying out its mission, and part of the mission of any successful non-profit organization is to raise money. Therefore, there must be people on an organization’s board who can be counted on to give... read more

Rating and Evaluating Prospects:
Whom Do You Ask For How Much?

No one would argue the fact that every fund-raising campaign needs a goal and that everyone connected with the campaign, including prospective donors, needs to be aware of that goal. Then why do people so often fight the setting of a goal for each prospective donor and sharing that goal with the prospect? Trustees often blanch at the idea, and it is the rare solicitor who the first time he or she is told that there will be a suggested giving amount for each of his prospects does not respond with, “I can’t tell people what to give!” They’re right. Solicitors shouldn’t try to tell prospects what to give, as this will engender a great deal of resistance. Yet setting a personal goal for all prospective individual donors, letting prospects know what their goal is, and helping them see where and how it fits under the umbrella of the campaign goal is probably the most important element of a campaign. No matter what sources you are approaching, you need to be ready with a suggested giving amount in line with what each prospective donor is capable of giving. Dealing with foundations, corporations, and government funders in this manner is easy. In fact, it is usually required. Grant application forms have a blank space where you fill in the amount requested. But when it comes to individual donors, we seem to think it is a different kettle of fish. It isn’t. Individual Donor If a fund-raising campaign is to have a realistic chance at succeeding, we must in the case of every prospective individual donor: Rate and evaluate the ability... read more