Funding is key for nonprofits. It helps keep the lights on and your cause moving forward. While funding is important, so are the sources. One of the biggest mistakes that nonprofits make is focusing on one source of revenue to maintain operations. Whether it is a major donor or a large grant, one funding source can limit your organization’s reach which is why it is important to diversify your sources. Here are some tips to help you diversify your funding sources.
Analyze your programs and services
Before applying for a new grant or approaching a funder for additional support, you will need to assess your current programs and services. Determine what is currently being supported with restricted funding. You will need to ask yourself about the duration of the funding, renewal possibilities, and reporting requirements. Examine your programs’ effectiveness with quantitative and qualitative measures. This will help you determine where to put your resources. It is important to focus your efforts on programs that are effective but need more sustainable funding.
Look into private foundation grants
Now that you have a handle on your programs and services, you can begin to look for private foundation grants. Private grantmaking organizations can be a tremendous asset in diversifying your funding. They can provide restricted or unrestricted funding while requiring little to no reporting.
Beyond just being local, the foundation should exhibit an interest in funding causes like yours. While the foundation may not fully comprehend the breadth of your work, they need to understand your impact.
Ask your board members, stakeholders, or anyone in your network to see if they have connections with foundations that would be interested in partnering with your organization. Leveraging relationships to get in the door with grantmaking organizations can help improve the outcome of your application.
Federal and state grants
Government grants are a great way to diversify your funding sources. While the application process for government grants is related to the merit of your application, networking is still very important. Be sure to attend any workshops or meetings offered for application or technical assistance. The government grant application process can be laborious and very involved. The agencies offering funding want to see that your program is effective and that you have internal controls in place to manage the funding.
Most agencies will require that you put an evaluation process in place and have reporting procedures to ensure proper oversight of the grant. Compliance is key to maintaining these types of grants. Consider additional resources you will need to manage the grant during the application process.
Fee for service model
Employing a fee for service model places some responsibility on the participants of your services and programs. In this model, the nonprofit’s client pays for a portion of the services and programs. An example of a fee for service model would be an afterschool program operated by a nonprofit where students are charged a nominal fee to participate. This model has several benefits including helping alleviate a portion of the financial responsibility for your organization.
Need help with diversifying your funding? Contact Auxilia today.
Photo Credit: Chronis Yan