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UPBEAT NEWS FOR DOWNBEAT TIMES:
WHAT YOU CAN DO NOW TO INCREASE REVENUE

OK folks, ZimNotes knows it's tough out there but, as we said in a recent article on this subject, "No Whining" (see "Economic Uncertainty and the Nonprofit Self-Fulfilling Prophecy"). Nonprofits are known for being creative in difficult times and problem solving. That's what we do best. Everyone is concerned about the impact of the financial crisis on revenues so let's not whine; let's do something about it. Just like you should do (or should have done) for your own portfolios (those lucky enough to have them): Diversify. Ensuring that your organization's revenues come from a diversity of sources is the best way to weather this storm. In this vein, ZimNotes will review with you a variety of ways that nonprofits raise money. Compare this list with your current methods, see which you are not currently doing, look for a good match in terms of current staffing and board participation, and plan accordingly.

Also, please understand that board members and staff members have roles to play with reference to each of the fundraising strategies below. For how to involve board members in each of these fundraising activities, please see our book Boards That Love Fundraising.

Foundations: Foundations are nonprofit organizations that exist to make philanthropic contributions. By law, they must donate at least five percent of their assets to nonprofit organizations each year. Foundation grants should be viewed as "venture capital" for nonprofits. That is, foundations like to help nonprofits get off the ground, and they will often fund a project within an organization. In the large majority of cases, however, foundations will not fund a nonprofit for more than a few years, and they should therefore not be viewed as sustaining funders far into the future. Also, the turmoil in the stock market means smaller foundation payouts next year. Please see The Foundations Center for information on grants in your area.

Corporations: There are a variety of ways to seek corporate dollars. While many larger corporations have set up separate foundations, the majority of corporations and businesses in the U.S. make their philanthropic contributions directly through the company. This may take the form of:

1. Financial contributions.
2. In-kind contributions, because some businesses get a better tax break by donating materials than donating money.
3. Sponsorships, which enable businesses to tell the world that they are "good corporate citizens."
4. Matching gifts.
5. Cause-related marketing, which simply means: How can a business make money through its involvement with a nonprofit? For example, a car wash may advertise that, if someone washes his/her car at the car wash during the month of June, 10 percent of the car wash's revenue during that month will be donated to the Leukemia Society. The car wash owner's assumption is that linking up with the Leukemia Society will be both a good thing to do and a money-maker, because folks will feel they're doing good by having their cars washed at a business that emphasizes philanthropy.
6. Venture philanthropy. Younger philanthropists, particularly from the high tech industry, are interested in both donating money and being active with nonprofits to make them more competitive. This might include serving on the board, offering expert business advice, or assisting in a formal review of the organization's operations. See for example the Kirsch Foundation that lists a number of venture philanthropy's websites and articles.

Government Agencies: In order to ensure that your organization is covering the government funding waterfront, you should review the Catalog of Federal Domestic Assistance or Grants.Gov to make sure that you are pursuing all potential federal funding sources. With respect to city, county and state funding, you should create and maintain good working relationships with city, county and state legislators, who can then apprise you of the availability of public funding and also check government websites (e.g. California). Check with your local nonprofit councils or support groups for listservs or mailing lists for government grants and requests for proposals. Some cities, counties and states have one location or website to review for most funding sources; see for example San Francisco's RFPs.

Religious donors: Every major faith in the U.S. has a national philanthropic office (e.g. - the Catholic Campaign for Human Development or the Jewish Fund for Justice). These grantors work in much the same way that foundations do: they have areas of interest and guidelines for prospective grantees to follow. Religious grantors are fond of nonprofits that serve needy populations; social services agencies are therefore likely candidates for funding.

Individuals: Of the $306 billion contributed to nonprofits by private sources in 2007, individuals gave 75% or $229 billion. Another 7.5 % or $23 billion was donated through bequests for a total of 82.5% or $252 billion by individuals. Foundations gave only 12.5% or $38.5 billion and corporations gave 5% or $16 billion. Grants are useful as far as they go, but sustaining funding comes from individuals (see former ZimNotes articles on individual fundraising) Here are some of the ways that nonprofits raise money from individuals:

*Direct mail: A successful campaign requires a list of likely donors; a compelling letter, return card and other enclosures; and smooth and reliable mechanics (i.e. - hiring a mailing house to send the letter on time). Board members can help by appending notes to letters sent to their friends and colleagues.
*Memberships: Technically, in a membership organization, the members elect the board of directors. Most nonprofits, however, use "membership" as a marketing device. That is, if someone becomes a "member" of a nonprofit (rather than simply a donor), he or she will receive certain "perks."
*Special events: Creative events can raise money and raise the profile of your organization. The most effective events are those that afford the opportunity for the organization's board president and/or executive director to address the audience. Luncheons, dinners and cocktail parties offer this opportunity. These are, however, the most labor-intensive kinds of events to plan and execute. See ZimNotes article Special Events: A Recipe for Success.
*Telephone solicitations: While frowned on by many, telephone solicitation does work. The trick is to make sure that the people making the calls know what they're talking about (and are committed to the organization), and the folks being called have an investment in the organization. For example, a K-8 private school might ask a group of current parents to call other parents, grandparents and alum families to ask for donations. The people calling care about the school, as do the people being called.
*Online solicitations: More and more people are spending their lives staring at computer screens, and this has a profound impact on philanthropy. Every nonprofit must build the capacity for folks to give via a "donate" page, and it is equally important to devise a strategy to drive people to the website through e-mail blasts, letters, press releases, and other promotional materials.
*Solicitation of major donors: A "major donor" means two things: someone who makes a donation significantly larger than the average individual gift to a particular nonprofit and someone who is solicited face to face. The most effective way to raise funds for a nonprofit is to sit across the table from someone who has a lot of money and ask for some. Sadly, most nonprofit board and staff members are terrified of face-to-face asking. No time like the present to look into this: every nonprofit organization has major gift potential, but too few are taking advantage of that potential. See former ZimNotes article Major Donors: Now More Than Ever.
*Planned gift solicitation: A "planned gift" is a gift for which plans are made now that will mature in the future. The most common kind of a planned gift is a bequest in a will. Every nonprofit should publish an online or hard-copy newsletter, and every edition of the newsletter should include a box that says: "When preparing your will, please consider a bequest to (name of organization)." This is a start, but the end game is to have a planned giving program that includes such things as charitable trusts, annuities and pooled income funds. See ZimNotes article "Get Wild With Planned Giving."
*Last but certainly not least are fee-generating activities: Many nonprofits supplement their philanthropic income with fee-generating efforts and have done so for years. Some, such as private schools, hospitals and performing arts organizations, secure the majority of their funding from such activities. Venture philanthropists (see above) like to give seed money for these types of activities. So don't sit around and moan; start planning today!

P.s. If you need help getting started, give Zimmerman Lehman a call at 415.986.8330 or 800.886.8330. We can help you figure out what the best strategies are for your organizatio

Copyright
2008 Zimmerman Lehman.

This information is the property of Zimmerman Lehman. If you would like to reprint this information, please see our reprint and copyright policy.

 

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