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Funding 101 for Nonprofit Organizations

Nonprofit Entrepreneurs

Funding 101 for Nonprofit Organizations

Nonprofit fundraising is a key success factor for nonprofit success. Raise money and you'll fuel nonprofit growth. Fail to raise money and it may be the end of your nonprofit entrepreneurial dream.

Even though a nonprofit organization's primary mission isn't profit-based, it still needs to acquire financial resources in order to survive.

Finding those resources can seem like a daunting task, but it can be done - and it's probably not as difficult as you think.

The way nonprofits earn income is through fundraising. However, fundraising isn't nearly as one-dimensional as it sounds. There are many avenues of fundraising that can potentially bring in the financial resources your organization needs to accomplish its purpose. Your job is to narrow the list of choices down to the ones that are the most productive and the best fit for your organization.

Donor Appeals

Donor appeals are the backbone of nonprofit fundraising. As a nonprofit leader, part of your job is to enlist the support of individuals who care about the same things you do and to persuade them to contribute to your cause. Donor appeals can take a variety of forms including annual giving campaigns, direct mail solicitations, and even newsletter appeals. Although your fundraising agenda may include many different components, healthy nonprofits rely on direct donor appeals to recruit new supporters and resources.

Grants

Grants are possibly the most misunderstood fundraising source for inexperienced nonprofit leaders. Are there foundations out there that are willing to fund organizations like yours? Probably. But tapping into that funding is not a guarantee. In fact, the competition for grants can be quite competitive. Over time, you'll gain the experience you need to compete, but if you are counting on a large volume of grant income to get your organization off the ground, you better start thinking about a Plan B.

Fee for Service

Some nonprofits are particularly suited to a fee-for-service arrangement. For example, a children's day camp may qualify as a nonprofit, but still charge campers a fee to participate in the program. In some cases, limitations may apply to the amount of income the organization can earn through fees. However, if your organization lends itself to a fee-for-service arrangement it's definitely an option worth exploring.

Special Events

Special events are another valuable tool for raising funds. Individuals usually pay to attend the event, which can then be leveraged to solicit additional funds and support for the organization. Some events - like banquets - sell tables to their supporters, who in turn invite potential new donors to come and learn more about the organization's mission. Don't ignore the publicity perks of special events, either. Special events are a great way for a nonprofit to get free press that can help attract additional donors and supporters.

In-kind Donations

Non-cash contributions can be just as important as a stack of bills. The donation of goods and services by local businesses and individuals eliminates the need for the organization to purchase those goods and services out of its own cash reserves. These in-kind contributions prove the adage that a dollar saved really is a dollar earned, and shouldn't be overlooked as a source of income.