We’ve all heard the phrase, ”Don’t put all your eggs in one basket!”
The meaning behind this old saying: Don’t put all your efforts into one thing because you could lose everything else—and be left with nothing altogether.
The same logic applies to fundraising.
While we at Stelter spend majority of our time in the planned giving and major giving world…for most nonprofits, smaller ones particularly, it’s wise not to put all your eggs in one basket, or rather, rely on one funding stream (e.g., a large government grant) as your main source of operational/expansion sustenance. Instead, develop multiple streams of revenue, or baskets, so if one source falls through, other revenue streams keep money coming in.
But you probably already get that—and are doing that. This topic, however, should get you thinking: Are we doing enough, in enough different areas, to minimize our risk of financial insecurity.
YOUR ONE BIG TAKEAWAY: Generally, no more than 30 percent of your nonprofit’s funding should come from any ONE source or revenue stream.
MOST POPULAR WAYS TO DIVERSIFY YOUR REVENUE STREAMS
“Follow the rules!”
Not an official term, “government grants” refer to funding from federal, state or local governments. These types of grants often come with stiff reporting requirements, but the payoff could be golden, as more than 26 federal agencies administer more than 1,000 grant programs annually.
- Federal funders typically look for projects/programs that will be models for others to replicate; state and local government funders typically look for strong evidence of community support for a project.
- Follow application instructions closely, especially submission deadlines.
- Seek expert help, like a grant writer or database assistance, if the submission and writing process becomes too unwieldy. Grant writers often can be hired per project.
NOTE: Interview several grant writers before you hire one and get names of former and current clients to call as references. Or you can start here for contacts: The Association of Fundraising Professionals (Consultants Directory—search specialty, name or location); The Grant Professionals Association (go to “Find a Consultant”).
“They don’t help keep the lights on.”
A foundation is a non-governmental entity that makes grants to nonprofits and individuals. A private foundation gets its money from a family, individual or corporation. A grantmaking public charity, or public foundation, gets its support from diverse sources, like other foundations, individuals or government agencies. Most community foundations are grantmaking public charities.
- Foundations primarily fund established organizations; they’re usually not who you go to for start-up funds for a new charity.
- They’re typically not looking to fund operating costs either, or to sustain an organization or particular program. Foundation grants work well to help create a new program or grow an existing one.
NOTE: Know how you’ll keep it running. Foundations also need to know next steps—how you’ll sustain the program after their money gets you to the first important goals.
“Promotion & partnership”
Sponsorships work especially well for campaigns or events, but companies or organizations may sponsor your nonprofit in a general partnership or for a specific program through a financial gift or in-kind donation.
Why do they do it? It’s good business. Companies can align their name with your nonprofit, and increase visibility and brand recognition while receiving positive publicity as an invested community partner.
In return, they’ll expect recognition or promotion of their brand, like logos on event-day banners or T-shirts, or recognition on social media or email promotions.
The boon for your organization? A company’s sponsorship could lead to a deeper, long-term partnership (read: revenue stream).
Where to start if you haven’t explored sponsorships? Board members can help brainstorm prospects and offer solid leads. They can also introduce you to business colleagues and other networks. Local businesses may be another good place to start, like banks or grocery stores, as they might not have large corporate hoops to jump through to give a donation.
“Before you’re off and running, think it through.”
Some of the most common types of fundraising events include galas, runs/walks, auctions and golf tournaments. A note of caution: Think it through and do your homework before doing an event; they can quickly spiral out of control in terms of costs and staff time.
Set a budget, stick to the budget and secure sponsorships to minimize potential hits to income. If you’re new to events, think quality over quantity. Choose to do one well-planned event over a slate of several smaller events that stretches your staff and budget too thin.
A BASIC RULE: Never depend on auction items to cover event expenses. And the primary purpose of an event is not to have a great party but to raise money and missional awareness.
“Take care of your tribe.”
Most likely, you’ve already got this revenue stream flowing at some speed. Individual donors are the cornerstone of nonprofit revenue, comprising 72 percent of charitable contributions. But within this “basket” you may find greater wells of opportunity.
Online givers—Online giving increased 23% in 2017, after a 15% growth in 2016, according to an M+R Benchmark Study. Let’s make it a pleasure for online givers to give with an easy-to-use, intuitive experience. Minimize clicks to donate and always include a link to a receipt.
Monthly givers—The same M+R Benchmark Study found online monthly giving grew 40 percent from the 2017 study. Monthly giving creates the most reliable revenue stream, as this group gives a specified amount every month to reach their individual annual goal. Monthly giving is appealing because it breaks down the total cost of a donation, making it more palatable for donors (giving $20 a month vs. a $240 one-time annual gift). Monthly donors often have higher retention rates and may become legacy givers.
Major donors—Cultivating major donors requires a long-term focus, ongoing communication and relationship building. Whether you have one person handling major gifts or a team, solicit donors according to your capacities. It’s like events—better to do it well and on a smaller scale then go too big, too quickly.
Planned (Legacy) giving donors—Today’s—and for that matter, yesterday’s—planned giving donors traditionally come from your consistent and loyal donor pipelines. However, due to the digital age we live in and the varying types of missions that nonprofits fulfill, planned giving donors can come into contact with you in a broad variety of ways, not solely through year-over-year donations. In fact, Stelter’s 2012 Donor Insight Report “Why They Give” found that 20% of donors that had already made a planned gift had never made a financial contribution to that institution prior to their planned gift.
We won’t put all of our eggs in one basket in terms of feedback. We want to hear what you have to say about diversification. How does your nonprofit maximize its “baskets” of giving?