Fund Development Planning Within the Strategic Planning Process
In today’s volatile landscape and amidst threats to many government funding sources, it’s especially important for nonprofits to evaluate, and potentially update, their fund development strategy in tandem with their strategic planning process. For some organizations, this will mean a redesign or refresh of their core business model. For others, a review will solidify an existing fundraising plan to support implementation of their strategic plan.
Most nonprofit revenue comes from a combination of government funding, foundations, major donors, small gifts from individuals, program service fees, corporate donations and sponsorships, and investment income. Research by Cal Nonprofits shows that the smallest nonprofits receive 65% of their revenue from individual contributions, whereas the largest organizations (with budgets over $20 million) receive significantly more government funding and just 22% of their funding from individuals. Stanford Social Innovation Review’s recent research on nonprofits that grew to become relatively large found that most rely on one dominant funding category, such as government or corporations, rather than depending on a diverse portfolio of funding sources, as one might assume.
Nonprofits typically have specialized skills related to their dominant funding category, whether it’s high quality relationships with a small number of high-capacity donors, or grantwriting, report writing, compliance, and policy advocacy to secure and maintain grants and contracts. It is important to recognize the different capabilities needed for disparate fundraising efforts and determine which sources are the best match for your organization’s capabilities — or adjust your staffing to align with your fundraising goals. Given the threats to federal government funding, it may be a good time for many organizations to focus on major gifts, including planned giving.
As strategic planning consultants, we emphasize the importance of assessing an organization’s business model and funding model as part of the overall strategy development and execution. We look at how organizations might deepen existing and already successful funding capabilities, and also if there might be an adjacent or emerging category of revenue generation for potential growth. We assess fundraising opportunities for the organization and identify areas most worthy of further investment, with a focus on those that have the highest impact.