Trading up to a new funding model


It’s been a long while since I’ve met a nonprofit leader – CEO, board member, development officer, take your choice – who’s completely satisfied with his or her organization’s funding model. Almost everyone agrees that the same-old, same-old isn’t cutting it. Some folks have even gone so far as plotting a course in a different direction. But pumping up the courage to actually do it – well, not so much.

If the above sounds familiar, you’ll want to take a look at the fall 2011 issue of the Stanford Social Innovation Review. You’ll find a great article that outlines four guidelines for identifying and developing the right funding model – that “methodical and institutionalized approach to building a reliable revenue base to support an organization’s core programs and services.”

Here’s some of what I highlighted from the article.

CLARITY TIMES TWO

Simply put, we believe that having clarity about how a nonprofit will fund its mission is as important as having clarity about how it will deliver its programmatic impact. . .  Almost every nonprofit has two jobs, each with its own set of external stakeholders. One job is to identify beneficiaries and make a difference for them with programs. . . the second job: cultivating a distinct set of funders. Building and scaling sustainable financial support is as complicated and important as figuring out the programmatic dimensions.

WISHING DOESN’T MAKE IT SO

Adopting a new funding model will undoubtedly require new capabilities – in fundraising, performance measurement, reporting, and sometimes even program design and delivery. . . A nonprofit may need to create and fill new roles, adjust the way the CEO spends his or her time, replace existing staff who lack the skills the new funding model demands, add more staff in areas where it is capacity constrained, or provide more training.

MAKE NEW FRIENDS AND KEEP THE OLD

When pursuing a new funding model one should not relinquish existing funding sources that don’t fit with the new model. These proven sources may go a long way toward complementing the new funding source, and serve as a stabilizer if the new source has ups and downs.

You can bet I’ll pass this article along to my clients, and points from the piece have already been tucked into a couple of my workshop presentations.  But that’s me. What’s your application of the article? What are the key take-aways for you?

Comments

  1. Very helpful. We are such terrible fundraisers at Circle of Hope, but we are in such need! Right now we are in one of our periodic eras of “we’ve got to get better at this.” Our needs aren’t huge, but they are daunting for us. For instance, we’d love to find $25K to support our Shalom House residents do peacemaking. Thanks for stimulating my imagination.

  2. Rob, Thanks for letting me know this post was helpful to you. As you think about funding strategies in support of the outreach ministries of Circle of Hope, I think you’ll find an an earlier article from the Stanford Social Innovation Review, “Ten Nonprofit Funding Models” (http://www.ssireview.org/articles/entry/ten_nonprofit_funding_models/) to be another great resource. Reading this article a couple of years ago was an “aha” moment for the board of MOPS International (which I am privileged to now chair).

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