Many experts consider fundraising to be the backbone of the nonprofit sector, as continuous flow of funds ensures NGOs to implement projects effectively. Raising money is indeed a challenge, but with some help and practice you can boost up your fundraising efforts. Fundraising forms the most important activity of any NGO to sustain and continue their efforts for social wellbeing and development.
This chapter discusses about the types of donors, types of funding, processes involved in developing a fundraising strategy and engaging donors in your NGO.
Types of Donors
It is necessary for you to understand the types of donors and the types of funding opportunities, before you start fundraising. There are several sources for you to avail funding for your organization, and to make the most of this opportunity, you will have to understand the various types of donors, their priorities and their core values. Most donors can be classified in to the following categories:
- Foundations: Foundations are non-governmental entities that are established to provide grants to smaller organization, research institutions and NGOs. Most NGOs rely heavily on foundations mainly because they provide grants for a long Different foundations have their own specific areas of funding and NGOs should conduct proper research before approaching a foundation for funds.
- Corporations: Corporations are business houses and private firms that provide funding to NGOs. Corporate Social responsibility has opened up new gateways for NGOs in developing solutions to various societal issues. Private sector, local businesses and International Corporations have huge potential to financially support the Not for Profit sector. Corporations generally support NGOs though donations, in-kind support and employee matching donation programs.
- Individuals: Individuals tend to support NGOs by giving donations or volunteering. Individual donors believe in your organization and your mission and therefore support the organization. Even though they may not donate a huge amount of money to the cause, they tend to contribute money on a regular basis. Also they help you in spreading the word about your cause.
- International donors: These include bilateral and multilateral donor agencies which majorly fund large international organizations. NGOs can also receive funding from development assistance agencies of countries, UN agencies, and multilateral development banks; worldwide sources also include international foundations, multinational corporations, international religious organizations, and larger international NGOs.
Types of funding: Just like there are several source of funding, the type of funding received from these sources also varies significantly.
1. Restricted fund: Restricted funds can be used only for a specific purpose, as per the agreement with the donor. These funds are often received as grants from foundations against the proposal submitted by the NGO. Most restricted funds clearly state of how the grant money is to be utilized and are accompanied by a formal agreement between the NGO and donor.
Example: Grants received from a foundation or a donor agency. To receive such funding, NGOs write a detailed proposal specifying the activities and a detailed budget showing the costs to undertake the activities. The proposals are reviewed by the funding agency and certain proposals get approved for funding. The approved fund can be utilized only for the activities that are mentioned in the project proposal. In case any changes are to be made in the budget, written approval is required from the donor.
2. Unrestricted funds: Unrestricted funds give the NGO complete flexibility to use the funds as per their There is no restriction in terms of how the funds should be used, most often these types of funds are provided by individual donors and during fundraising events. Unrestricted funds are generally used for expansion of NGO activities and other miscellaneous purposes.
Example: Donations received by a NGO from individuals, families or corporations. Unlike grants, donations are not received through a competitive grant proposal. Donations can either be in the form of cash or in-kind gifts. Donations are typically solicited through fundraising events, crowdfunding etc.
3. Temporary Funding: This type of funding is available for a short period which may arise due to the occurrence of an unexpected event. Temporary funding is generally received by organizing a fundraising event, individual charity or member’s contribution.
Example: Funding received during a disaster can be used while carrying out relief work for the victims. Such funding is temporary and does not help in sustaining the NGO in the long run.
Writing a fundraising strategy
A fundraising strategy helps you to identify financial needs of your organization and accordingly outline the activities required to meet those needs. It typically helps you to plan the fundraising process for a period of 3-5 years by setting necessary deadlines and responsibilities.
The primary purpose of a fundraising strategy is to prioritize activities to ensure fund flows through varied sources to help the organization in sustaining its activities. The best way to start writing the fundraising strategy is to analyze the following:
- Current status of funding: You need to analyze the current financial health of the organization, before seeking additional funding. You will have to closely monitor the flow of funds to assess if they are being used effectively.
- Proposed and planned activities for coming years: Gather information from project staff about the status of projects and get an understanding of activities that are to be taken up in the coming years.
- What is the target of fund raising for a particular year? You need to fix upon a target as the entire strategy will depend on the target you set. Work with your project managers to work on the budget and financial resources that you require.
- What are the areas/causes for which your organization needs fund in a particular year? You have to identify the area which needs immediate funding. May be a particular year you are focusing on health projects, and may be the next year you need funds for setting up a school for dropouts. Your selection of donors will depend on the cause you select, because not all donors will donate for all causes.
- Staff responsibilities: You have to identify people who are good in relationship building and networking. Even if you have a small team, identify the person who has exceptionally good communication skills. Giving responsibility always yields better results.
- How many donors to contact? Depending upon the size of funding and the cause for fundraising, you will have to focus on a certain number of donors. If you think you can contact all donors at one time and engage them, let’s be honest it won’t be Based on the financial requirement and the cause, identify prospects from your donor pool. Gather all relevant information about them so that you get an idea of the number of donors you will need.
- What activities will you undertake to raise funds? There are several activities that can be undertaken for raising funds. You should look into all aspects of fundraising and identify the ones that are most suitable for your organization.
Once you are clear with the funding goals and priorities you should start writing the strategy, under the following heads:
1. Case of Support: In simplest terms a case for support is a narrative of your organization that tells the prospective donors about your funding requirements and the problems you would address on receiving the funds. In other terms it is a document that provides donors with information about your organization, future goals and aspirations, accomplishments, and why should a donor invest in your program. Key features of a case for support:
- Should be attractive
- Should be donor centric
- Should clearly illustrate your funding requirements
- Should showcase your accomplishments
- Should convince the donors to engage with your organization
Mention clearly about the funds that you require to sustain your activities. Along with the financial requirements you should also make note of other resources that may be required by your organization.
2. Who are the prospects? According to the funding requirement and the case of support, you will have to start looking for prospects from your donor database. Start going through donor webpages, history of past donations, donor priorities etc. to prepare a list of prospects.
3. Plan for approaching prospective donors: Once you have the list of prospective donors, prepare a plan of approaching them. Each donor in your prospective list will require special attention as they may have different requirements and terms of providing funds. Make sure you read through their guidelines and understand the process of funding before approaching them.
Also as there are various methods to approach a donor viz. Online, fundraising event, telephonic, door-to door, sponsorship, applying for a grant etc. clearly mention in the plan of how you will approach a particular donor. You can discuss with your board members for help in introducing your organization to a few prospective donors.
Along with conventional sources of funding you can also explore the following options:
- Crowdfunding: Crowdfunding is the practice of funding a project or venture by raising monetary contributions from a large number of people, today often performed via internet-mediated registries, but the concept can also be executed through mail-order subscriptions, benefit events, and other ’ (Wikipedia).
- Membership: You can start a membership process in your organization, wherein you charge a certain fee from members. This fees can be used as an unrestricted fund for various operational
- Events: Organize special fundraising events like cycle rallies, marathon etc., to raise funds.
- Donation boxes: You can place donation boxes in malls, community halls etc. along with a banner of your organization. People interested in your cause can donate money though donation boxes.
4. Responsibility of staff: In the fundraising strategy clearly mention the roles and responsibilities of your staff members who will support you in the process. For example, people with really good inter-personal skills and communication skills should be involved in directly contacting the donor, while a person with really good research skills should be used for identifying the prospects and conducting research.
5. Calendar of activities: Develop a calendar of events, that clearly indicate the schedule of major activities which may include; Timelines to contacting a particular donor, organizing a fundraising event, initiating an online fundraising appeal etc.
Incorporating the above mentioned tips in your fundraising effort will surely boost up your performance and will help you engage with many donors. Just remember that these tips can help you in improving your performance and if you don’t get immediate results do not lose hope but instead keep trying and integrate the above mentioned tips in your routine.
Organizations need to understand that raising funds is a time-taking and skillful job. Proper planning and strategy can generate precious funds to implement and upscale their projects.
