For NGOs, identifying funding sources and deciding on the suitable funding model for their organization is one of the most challenging tasks. Choosing the right approach to handling nonprofit finance isn’t easy.
Every organization needs money to grow. Nonprofits are no exception to this rule. As a result, money is often a topic among nonprofits and its functionaries, and discussions about money get heated even during financially unstable times.
On the one hand, there are too many funding models to choose from, which can lead to confusion. On the other hand, however, some NGOs and nonprofits still feel stuck in their options, and the funding model remains limited.
What is a Funding Model?
Bridgespan defines a “funding model” as a systematic and institutional approach to creating a reliable revenue base to support an organization’s core programs and services.
In essence, a nonprofit “funding model” pools the different funding sources for each nonprofit into a single group. For example, a nonprofit may get funded 50% through grants, 30% through events, 15% through membership programs, and 5% through in-kind donations.
Another may get funded 70% through a major donor program, 20% through direct mail fundraising, and 10% through events. Different types of nonprofits adapt to various funding sources depending on their mission and programs.
While receiving funding from multiple sources is common among most NGOs, research has shown that 90% of the most prominent NGOs adopt a funding model built around a single primary source of revenue.
We often hear that diversifying revenue streams is good. But it can be hard to know what it means and how to put it into practice.
Individual funding is one of the best and easiest ways to get funds in cash. There is flexibility compared to institutional funding, and your relationships are more important here.
Sometimes, during an event, or even in the office of NGOs, willing donors hand over their donations. Although it is an effective and relatively easy way to get money, paperwork is also negligible and can be obtained in less time.
There is also a perception that most NGOs do not and should not rely on this method. However, although they are not trusted with this model, cash donations are highly expected by nonprofits as it often provides a great relief to struggling organizations.
While individual funding has not become an established model, numerous surveys and studies among NGOs and NPOs show that nearly 70 percent of all donations to nonprofits come from individuals. According to the NP Trust, individuals in the United States gave more than $484.85 billion in 2021. This reflects a 4% increase from 2020, making individual charitable contributions one of the best nonprofit funding sources.
Individuals give more than 70% of all money raised by nonprofits in the United States, according to GivingUSA. This percentage fluctuates annually, typically between 70-80% of all giving. Individual donations, such as corporate and foundation investments or major donor commitments, may not result in significant contributions. However, individual efforts can make you more competitive when fundraising against other NGOs also vying for these small-sized donations from individuals.
The survey and research results show that the individual funding model can be a good funding source for any NGO. So focusing on individual donors and making them the focal point of your funding model is an important and wise decision for every NGO today.
What is Individual Funding?
If understood in simple language, Individual Funding is funds that a particular person gives to some NGO or Nonprofit. Generally, the funds and donations are provided by an individual from his income and assets. However, it can be anyone who does support the work of NGOs.
Personal money giving to charity has already been a long tradition in all cultures and religions. But the concept of giving to NGOs is recent. Individual donors can make a one-time or recurring donation. They also give in various ways: online and offline, through events, auctions, planned donations, and more.
To build a base of support from individual donors, you start by educating people about the NGO sector and your NGO’s work. Then, work out a solid plan and thoughtful approach. Try gathering staff, board, volunteers, and community members to discuss giving traditions in your community and identify when, where, how, and why people give.
Who are the individual donors?
Individual donors include the millions of people and families who donate through small contributions or even million-dollar endowments. While the specific individual donation is small, the numbers rapidly add up here.
There is a wide range of potential donors for any commendable cause. Every donor has a different reason for giving. While giving, each person has a vision and endeavor for giving to aid the organization. Therefore, the NGO or its fundraiser team should have a definite plan of approach/mode.
It is essential to use effective communication to attract potential donors to receive funds to support. Potential individual donors include the following:
- High Net worth Individuals (HNIs) and upper middle class.
- Family and friends.
- Students and Members of charitable organizations.
This list does not end with this only; anyone else who understands and supports the work of your NGO can also be a potential individual donor.
How do we identify and involve individual donors?
Individual donors can be anyone – people from your own geographic, ethnic, or faith community and people outside of it.
They can be friends, neighbors, or co-workers of board members, volunteers, or employees. If you look around, you will see that you are surrounded by people who support you and will be willing to give if you ask for something.
Bring a group of board members, staff, volunteers, and project participants. List people you already know who believe in your work and can contribute, big or small. Think of members of your community whose services have helped, volunteered their time, donated, or mentored, such as university professors, teachers, employees of banks or other institutions, businesses, and owners.
Also, list people who may not know about your work but might be interested in it. To compile this list, go beyond just listing individual names and consider categories or networks of potential contributors.
The term grassroots refers to communities and people directly affected by an issue or problem. So, grassroots fundraising means raising money from these communities and people.
Many organizers wonder, “How can my organization raise money from individuals?
We don’t know any rich people!”
Most community-based organizations have widespread support from many willing to give when asked.
This is the core of grassroots fundraising. Even people with very modest income can give a little to fund or help in some activity. Many small contributions together become a significant amount.
You can test different audiences to see what the response is. You will almost certainly find that many people want to support you for various reasons than you think and imagine.
Go out and meet people; talk about your work and vision; Hold a meeting and present what your organization and you are doing for good to those who have expressed interest.
Finding Supporters for your NGO
If you’re starting with fundraising, you perhaps don’t even know who your supporters are, and you don’t have the practice to ask. So the first step is to find some people who might be interested in helping your NGO and work on ways to ask for their support. Then, you have to ask them something.
Thinking about what to ask for and how much can be an excellent opportunity to start creating a fundraising message.
An appealing, emotional, and relevant fundraising message can connect prominent interested individuals with your mission and help raise small contributions from people who are impressed with your mission.
Finding some supporters is the first step in finding more people to support you, which can be a step toward building a supporter base. Here are some first steps to move forward:
Ask all those who are already associated with your organization. It can very much surprise you to learn that your support base is already available.
Ask everyone giving you names to suggest a few people who might be interested in the NGOs’ work. Suggested individuals should be followed up with email, letters, telephone calls, and other communication channels. Follow-ups with potential individuals are important to increase the chances of getting funds from individuals.
Create a mailing list
To maintain communication with your donor, prepare an appeal, and be specific about the target amount. In addition, efforts should be made to produce a suitable brochure and leaflet about your work.
When you start creating a mailing list, it gets pretty simple to grow further once you have a mailing list of 100 or more. For example, you might discover that the direct mail fundraising program is gradually taking shape. Once your list starts to expand, it will need to be appropriately managed to add new names, update information about each donor, ensure you are notified when address changes, etc.
Network with your local community
Most NGOs fail to take advantage of the fact that they are part of a local community and that some local people may be interested in what is happening in their area. You should connect them, and If people are interested –
– Distribute the literature of your work to interested locals.
– Make a note of it and ask them if they would like to receive an occasional newsletter or emails about your work.
– Ask the local community members to come and visit your organization to see your work.
– Invite a famous personality to participate as it will draw others’ attention, and it will generate a positive impact within the community for your work
– You can also consider a local person as a board member of your NGO. This is always good for any locally based organization, as it will provide a link with the local community.
What motivates individuals to donate?
First, identify your target audience. From there, you can find out what incentives will motivate them. For example, to have a deliberate pursuit of receiving donations in person, you must understand what motivates people to give back and tailor your message, fundraising techniques, and programs accordingly.
Individuals are more likely to donate when they know their money will go directly to helping others or a specific program close to their heart. So which motivates and attracts them?
Individual donors often want something in return for a donation, even as simple as a thanks email or newsletter telling them how their contribution has supported your organization’s efforts.
What are the most effective practices in fundraising from individuals?
Asking for money is not easy for everyone, but it is essential to the survival of any organization. When it comes to NGOs and nonprofits, it is equally important. Describe an effective way to address fundraising challenges and how to build a strong base of lifetime donors. Here are some effective points that NGOs can try to implement and optimize in their donor development efforts:
- Passion for your vision
- Don’t feel ashamed to ask for money
• Focus on outcomes
• Tell powerful stories
• Start with what you know and work your way out
• Invest time in building relationships with donors
• Find ways to involve your donors in your organization’s mission
• Professional fundraising staff
• Foster a culture of philanthropy
Passion for your vision
All NGOs and nonprofits start with a good idea, usually a founder or social entrepreneur with a vision of how they want to change the world. And how can they solve the most significant problems from local to global? From sensitizing about the environment to working to empower women and children. The work you and your NGO, are doing for suitable needs a passion. Always keep the focus on your work with passion. Donors are naturally drawn to these inspiring leaders, fundraisers, and program staff committed to the cause. So here, it is necessary to ensure that you and your NGO continue to do your work with passion and uninterrupted it will create a long-term donor and support base.
Don’t feel ashamed to ask for money
Fundraising is an easy task. For this, you must step out of your comfort zone and talk openly about this sensitive topic. While many organizations take the easy way out and dial it in, often opting for more convenient but less effective methods like email appeals to their donors or crowdfunding platforms. The most effective organizations accept the challenge and ask people for money. They ask their friend and family. They ask their co-workers.
Remember here that you are asking for this not for your expense but for your nonprofit and its beneficiaries – for a cause you believe in. So instead of apologizing, treat it like you’re doing a potential donor a favor by connecting to a good reason. As a fundraiser, you are making it possible for them to experience the joy of giving so they can be part of something meaningful and more significant.
Being unapologetic when asking for money has a significant consequence: anyone who does it face-to-face or over the phone, messages via WhatsApp, and other communication channels. On the other hand, impersonal fundraising methods such as email blasts or online crowdfunding campaigns are not as effective at soliciting individuals. It may be the reverse; you could miss out on a golden opportunity to secure an outstanding contribution if only you had not spoken directly to the prospect and asked for their support.
Focus on outcomes
Any donors are usually attracted to good programs. However, an NGO or nonprofit should first consider that before you begin your fundraising drive, ensure you have a great program model that deserves to be shared with potential donors and others.
If your NGO can show a measurable impact and outcomes on the problem you’re trying to solve, money will follow itself. The program’s impact and good work can significantly impact society and individuals, and it easily can be converted into support in terms of money and in kind.
Tell Powerful Stories:
Great fundraisers appeal to both the head and the heart. The head is about impact – seeing measurable outcomes through performance metrics. The heart is about telling stories of transformed lives. They appeal to emotions and pull the strings of the heart.
Any measurable impact with heart-touching and emotional appeal is a potent tool to connect people and donors with your cause.
Invest time in building relationships with donors
Fundraising is about relationships, and individual fundraising is about getting to know your donors as persons. It’s about understanding their unique reasons for giving.
- What inspires them?
- What do they care about?
- What do they think of your vision and ideas?
- What information would they like to receive from your NGO?
- How do they want to be involved in your organization?
It’s essential to stay in touch with your donors throughout the year so that when it comes time to ask for money from them again, it’s not the first time they’ve heard from you in a while but rather a natural continuation of what’s going on, over a long period.
Building a stronger relationship with individuals realizes the importance of their donation, and they feel connected with the organization. For example, suppose they regularly get updates from organizations or NGOs. In that case, they can understand how their money is making an impact, develop a sense of partnership, and motivate them to donate again.
Find ways to involve your donors in your organization’s mission
Giving money is just one-way people want to do good in the world. Equally important is giving your time. So when developing a relationship with your donor, please don’t treat them as mere pocketbooks. Instead, think about offering them multiple ways to connect with your mission.
This includes volunteering with your beneficiaries or providing helpful expertise to your leadership, for example, serving on event committees or your board of trustees.
Investing significant time and strategy in developing and implementing a volunteer program can save your organization money. Volunteer management and employee engagement efforts are a lot of work, but the investment usually pays off. Volunteers can be converted into donors, and first-time donors can also volunteer as the next step along the engagement.
Professional fundraising staff
Passion is not enough. To succeed, nonprofits need to pay full attention to potential research, new donor acquisitions/events, farming, following, soliciting, and stewardship. In addition, there is a need to find qualified professional staff. Finally, donors want to connect throughout the year to know progress for work and mission, and sometimes ask for membership renewal requests, and it is vital to timely click with donors and reply to their queries and request.
Many NGOs can rely on unpaid volunteers and untrained staff, but they struggle to meet their needs. Investing in professional fund development staff generates significant revenue for the organization. It’s essential to recognize fundraising as a profession and one that deserves to be paid a fair salary as any other career.
Foster a culture of philanthropy
Unfortunately, most NGOs, board members, and all team members are not involved in fundraising. This finding was factual regardless of the size of the organization. It would help if you promoted a culture of philanthropy in your organization by involving all the stakeholders, including board members and staff, volunteers, and supporters.
What are some strategies and tips related to individual donation?
Following are some strategies and tips for maximizing individual donations, which will help your NGO grow:
When planning a fundraising event or campaign, make sure you offer multiple donation tiers and encourage donors to give what they can afford without putting pressure on their budget to donate.
Offer an online process where people can donate electronically via internet transfer, credit card, PayPal, and other online modes.
Create ways for supporters to contribute in small periodical support, such as setting up recurring contributions with monthly billing options, such as PayPal subscriptions and other platforms designed specifically for these transactions.
Since giving individual donations is so vital to the work of your nonprofit, here are some strategies for maximizing contributions:
First, develop meaningful relationships with donors. The success of any fundraising campaign depends on the strength and depth of your donor relationship. Unfortunately, this is an area where most NGOs have scope for improvement, as many donors feel isolated or do not know how they fit into the overall vision.
The most important thing to focus on is building relationships with donors and creating a rich and personal relationship with them by calling, visiting, and sending private messages.
Second, develop a donor management strategy. This strategy should outline the best ways for you to engage your donors and get feedback from them. This strategy must align with the organization’s needs and the donor’s wishes.
Do not use ad hoc methods to provide your nonprofit’s communications. Instead, develop a plan to support your giving program and stick to it. Then, you will be top of mind for your supporters.
One of the most effective ways to raise money is through individual donations to NGOs. You can do this by asking people for assistance or leveraging your relations, friend and family, social media networks, and networks in your community. Two strategies depend on the type of donor you need to reach and your available time. First, individual funding is about your relations with the donors, so remember that your connections and network will pay for your cause. The most important thing to focus on is building relationships with donors. Building a rich and personal relationship with the donor is a great way to achieve the success of individual fundraising.