Nonprofit Fundraising Basics
Cate Homicki, MPA
THE HEAD TRIP
First off, most people are scared of asking for money. Successful fundraisers know, good fundraising doesn’t involve guilt about begging for money. It’s all about mindset. A fundraiser is empowering a potential donor to contribute resources to help drive the change they want to see in the world. Neuroscientists tell us that people who donate to causes they care about get a rush of happy neurotransmitters in their brains. Think about asking for money as giving donors an opportunity to create change and feel better about themselves in the process. It’s a win-win proposition.
To get charitable gifts, it helps to have nonprofit status—501(c)(3) in the U.S. To establish a nonprofit, you’ll need a mission statement and a board of directors. If your group isn’t ready to attain nonprofit status, then in the U.S. and perhaps in Canada, you can use another organization that has nonprofit status as a fiscal sponsor. Charitable or nonprofit status lets people or foundations give to you as a tax-exempt organization. This is a requirement for most private foundations.
There are organizations, such as the Tides Foundation in the U.S., that offer fiscal sponsorship. Or, if you can find a mission-aligned existing nonprofit in your area, you can ask them if they would serve as a fiscal sponsor for your group. They often charge a fee ranging from 7% to 15% of donations, depending upon administrative burden.
For a local lending library starting a program, potential sources of funding are: local community foundations, cities or municipalities, or counties. Often local governments will have community development funds and will award project grants addressing community needs.
Foundations based in the U.S., some of which will fund projects in Canada, that have an interest in sustainable production and consumption include:
|· Bullitt Foundation
· Garfield Foundation
· Johnson Family Foundation
· Merck Family Fund
· Overbrook Foundation
|· Singing Field Foundation
· Summitt Foundation
· Wallace Global Fund
· Weeden Foundation
Foundation fundraising is very competitive. It takes a long time and the odds are typically fairly low to get a grant from a national foundation. I’ve personally found it easier to get funding for local projects from local municipalities and counties or locally-based community- foundations.
Elements of a strong proposal include:
- Problem statement that addresses a problem that your project is fixing, and includes facts, statistics, and or anecdotes that support that the problem exists
- Solution Statement—a simple overview of how your project will solve the problem
- Project Plan that describes what you will do, timelines, and outcomes of your project
- Evaluation Plan that describes how you will evaluate success
- Key Personnel – a statement of the qualifications of the people executing the project
- Organization summary describing: mission, what you do, how long you’ve been around, and why you are well positioned to achieve your stated goals
- If you are a new start-up, a fiscal sponsor or collaborator can help establish your credibility
- A detailed project budget
- An organization’s annual budget (if you are an established organization)
- Tax records or audits (if you are an established organization)
- Sometimes it is helpful to have letters of recommendation for your project
- Sometimes it is helpful to have a log of volunteer hours to show in-kind support
It takes time to get grants. You are usually looking at a horizon of 6-12 months to go from identifying an opportunity to getting a grant.
What are the needs your lending library is addressing?
There are many needs lending libraries may address. If you are working with an economically challenged community, you may be providing valuable resources that can help people maintain their homes and yards or even create new businesses that they couldn’t otherwise afford to begin without your free or low-cost resources. Lending libraries also help reduce consumption and waste by getting people to reuse durable goods many times. They are a great sustainability solution. Another benefit afforded by lending libraries, especially those that offer classes and events, is community building.
MEMBERSHIP FEES OR USE CHARGES
Foundations and funders like to see organizations on a path toward self-sufficiency if possible. To help make this possible, some libraries chose to charge for their services. Some have annual fees, some have sliding scales, some charge per item borrowed. This can be really helpful for financial sustainability.
If your organization is using myTurn.com, you even have the option to setup different membership levels based on:
- Loan length (how long different membership Levels can borrow items)
- Discounts on loan/rental fees and late fees, which allows you to have lower membership fees but with per loan fees (or higher per loan fees)
- A maximum number of items checked out at once time based on membership type
According to myTurn, and based on data from their customers, allowing members to sign up and renew online increases both membership and renewal rates leading to more stable yearly income.
Most mature nonprofits have multiple channels of donations and revenue. While grants are often great for starting up a project, they can be harder to sustain for long-term operations. That makes it important to diversify funding channels. Common divisions among fundraising include:
- Major Gifts: relative to the size of your organization, a Major Gift may be $1,000 or $10,000
- Public Support: public donations from $5 to $1,000),
- Online Giving: similar to public support, but donations that come in from online sources including your own website, Facebook, etc.
No matter what type of fundraising you are doing—foundations, major gifts, corporate sponsorships or public support—all channels require the same basics.
- Research and identify prospects/audience
- Cultivate the potential donor(s) through meetings to get them excited about your work
- Make a solicitation that is reasonable for the donor’s capacity
- If you get the gift(s)—then steward the donors well so you have a good opportunity for renewed gifts
Donor stewardship is critical for long-term success. You need to make sure to thank organizations or people for their gifts, send them reminders of what their dollars supported, and have an organized process to ask for renewals. It’s great if you can host an event once a year to recognize and thank your donors and help build community. The more involved your donors feel, the more likely they are to remain engaged
It’s wonderful when you can get a foundation or major donor to give you a “challenge grant or gift” where, for example, they might give you $10,000 if you can raise $10,000 from the public. Offering a dollar-for-dollar match is a great way to get people to give..
Resources to help manage online giving include:
- PayPal Donation button (plugins for most content management systems, like WordPress, make this easy)
- Facebook allows US nonprofits to accept donations directly via Facebook. Learn more at: https://donations.fb.com
- Amazon Smile allows members of the public to send 0.5% of “eligible” purchases to your nonprofit. Learn more at: https://org.amazon.com
We’ve seen a number of mission-driven projects get startup funding through programs like Kickstarter. You might have a Kickstarter campaign for a new lending library or expansion project and offer donors a year of free membership or some other benefit. A good marketing and outreach plan is necessarily to drive success.
FREE COURSES AND RESOURCES
Introduction to Finding Grants
Introduction to Proposal Writing
U.S. Only: Nonprofit Startup Resources by State
Samples of successful proposals
Guide to Proposal Writing Audiobook
Information on foundation databases: http://www.thenonprofittimes.com/news-articles/finding-grants-through-online-databases/
- Foundation Center is the industry leader. They offer a range of access to databases as well as fundraising workshops, webinars and online resources.
- FDO Essential is Foundation Center’s most affordable option at $23.28 USD per month or $558.60 for two years. Or, you can just subscribe for one month for $50 and do all your research that month.
Another free resource in the United States is GuideStar.org. You can sign up for a free account and download foundation tax documents. They are typically a couple years old. It takes one to two years for the tax records, called 990s, to get published. The 990s tell you a lot about the foundation’s financial circumstances and who they are giving to and in what amounts. It’s more arduous to dig through 990s than use a database like Foundation Center’s or Foundation Search. But the information is all there, if you know what U.S. Foundation to look for. All the information that goes into the professional databases is derived from these tax records. I’m told you can only get this kind of detailed information on U.S. Foundations. There isn’t the same level of transparency in Canada or Europe, as I’m told.