Introduction Relevant Background

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2 Introduction Relevant Background Wall Street to New York Cares corporate volunteer programs Student of social enterprise leaders; co-president of Social Enterprise Club 20 years of Advisory, Entrepreneurial and Management Consultant experience Corporate at Bain & Company Startups Nonprofits Very active volunteer including as volunteer fundraiser Launched and ran income-generating programs (NY Cares, Georgia Tech, GCN)

3 Agenda Sustainability Fundraising survey results Do you know your funding model? Types of funding & success strategies Assess Your Funding Model and Future Opportunities Richmond Toolbank fundraising plan example Exercises Inventory Your Assets to Explore Income Generating Opportunities

4 Sustainability is more than Fundraising Primary components of nonprofit effectiveness: Decisive, strategic and accountable leadership Internal collaboration and alignment Vision and motivator Financial and programmatic adaptability Resources to deliver core programs TCC Group the Sustainability Formula

5 Stronger resource sustainability Only 28% strong, 30% challenged and 42% adequate Common elements of stronger resource development Able to secure resources from institutions Secure long-term commitments Board is active Resources invested and managed well

6 Revenue types & sources Total Revenue Contributed revenue Earned revenue

7 Revenue types & sources Total Revenue Contributed revenue Institutions Corporations Churches Foundations Individuals: vehicles for asking Mail: hot and cold lists Phone-a-thon Service clubs (Rotary, Kiwanis) Major gifts solicitations Annual gifts Planned gifts Pledges

8 Revenue types & sources Total Revenue Earned revenue Related income Un-related income Government contracts Fees charged to third-party payers Fees charged to consumers (clients, patrons)

9 The Nonprofit Business Model Every organization has one whether you know it or not. Explains how a nonprofit generates and allocates revenue to accomplish its mission and remain financially viable. Nearly all nonprofits today are hybrids combining earned income with donations. Business models change over time. Businesses with the same services can have different business models.

10 Going after every possible source of funding is not a winning strategy for most nonprofits As organizations scale, funding becomes more concentrated on fewer sources ( From Small to Scale finding: average of 80% primary, 20% secondary) Natural matches will dictate the best sources to pursue

11 Sources: Be as specific as possible when defining current and potential funding sources 1 Source of funds 2 Funding decision-maker 3 Funder motivation This is what we call a funding model

12 Funding Model Type of funding e.g. foundation, government, individual donor (small and major), etc. Funding decision-makers e.g. administrators of government department, foundation program officers Funder motivation the natural match of a nonprofits mission and the beneficiaries served, motivations altruism (help disadvantaged kids) collective interest (NPR) self-interest (private school; corporate reputation & prestige from board service) Finding Your Funding Model - Bridgespan

13 Types of Funding & Keys to Success Type of Funding Indirect funding Examples In-kind Volunteer labor Earned income Fee-based services Reimbursement from second-party payers such as Medicaid Product sales or consulting fees Events Lunches and dinners Sporting such as fun runs Keys to Success Appealing cause & available labor; strong volunteer program Unique asset or strong capability Ability to cost-effectively reach target and deliver service Startup and operating capital Strong leadership of board & volunteers to support/promote Appealing event

14 Types of Funding & Keys to Success Type of Funding Corporate sponsorships Individual donors Examples Tables at dinners Advertising in magazines Vendor programs or memberships Board contributions Annual donors Major donors Keys to Success Board member ties to corporate sponsors Appealing cause & event Boards should lead Beneficiaries/compelling cause Strong sales & marketing Foundation Grants Institutional foundations Small family foundations Corporate foundations Meet criteria of funding type Ability to demonstrate impact to institutional Government Local, state or federal Ability to foll0w regulations & to fulfill reporting Track record Key administrator relationships

15 The Ten Nonprofit Funding Models 5 Examples of 10 Heartfelt Connector Beneficiary builder Member motivator Big bettor Public provider Stanford Social Innovation Review; Bridgespan Group

16 Heartfelt Connector Have a large cross section of people already shown that they will fund causes in this domain? Can we communicate what is compelling about our nonprofit in a simple and concise way? Does a natural avenue exist to attract and involve large numbers of volunteers? Do we have, or can we develop, the in-house capabilities to attempt broad outreach in even one geographic area?

17 Beneficiary Builder Model Reimbursed for services that individuals (or their families) benefit from but typically rely significantly on those who have benefitted in the past/alumni Keys to Success: Does our mission create an individual benefit that is also perceived as an important social good? Do individuals develop a deep loyalty to the organization in the course of receiving their individual benefit? Do we have the infrastructure to reach out to beneficiaries in a scalable fashion?

18 Social Enterprise Benefits & Challenges Benefits: Supports costs of operations for core programming or funds for scaling Puts clients to work, creates wages, or teaches entrepreneurship or career skills Provides leverage for loans, matching funds for other grants or unrestricted income Creates a sustainable model via additional revenue Provides a lower cost model for services or products that people or other professionals need ; some services for free Challenges: Can be a distraction or create significant complexity Perception nonprofit services are not as high quality If direct competitors, investment needed to stay competitive

19 Implementation is a timeconsuming process New funding strategies typically need two to three years to take hold Developing an effective implementation plan includes metrics, milestones, clear initiatives and leaders

20 Fundraising Survey Results Top funding types of affiliates average Foundations 18 Corporate 45 if Corporate Foundations 13 Corporate Donations 23 Special event sponsorships 9 Most all of you (5/8) have two that are above 50%, with half 3/8 having 2/3 in top 2 Most have 4-5 types; 5/8 of you said corporate is a natural, varied on second type corporations with a large volunteer presence in the community can understand the benefit of the Toolbank We match most giving priorities because we serve so many types of agencies Toolbank is setup as a corporate model of support

21 Funding Model Table Discussion What is your Funding Model? Where are the opportunities?

22 Finding Your Funding Model Steps Analyze your current approach to funding Learn from peer funding approaches Identify and narrow your range of funding model options Evaluate the revenue potential and costs of short-list funding options Select funding models to implement 6 Develop an implementation plan

23 Effective funding strategies address four components Goals: What are our strategies and funding requirements (our uses ) to succeed? Sources: What revenue sources (or categories) will we prioritize? Match sources to uses Capabilities: How will we support the work required to develop and sustain our funding strategy? Implementation: How will we know we are making progress toward our strategy?

24 Richmond Toolbank Funding Plan Trey Bearden, Executive Director

25 Boards and their Importance to Funding Success - 3 rated board support for fundraising poor, 4 okay and 2 high

26 Exceptional Boards Operate at a higher level that is both more AND different Gives more of time, talent, treasure but also act differently Time spent more wisely Skills and social networks better leveraged Treasure more strategically deployed

27 Exceptional Boards Measure organizational impact AND evaluate their own performance Discuss AND debate ideas Open doors And make connections

28 Fundraising: Aside from Strategy, What Do We Ask Board Members To Do? Board Fundraising Requirements Make a personal monetary contribution Identifying donors and/or soliciting funds Attending fundraising events Yes No 2011 Georgia Governance Index Georgia Center for Nonprofits

29 Funding Landscape $291 b given in the US in 2010 with 73% of that from individuals Sales Foundations Individuals Bequests Corporations

30 Boards Role in Fundraising #1 Rule: Boards should lead the way 1. Personal financial contribution 100% rule by many foundations 2. Making connections & cultivating prospective donors 1. Employers & business partners 2. Friendraising 3. Solicitations of dollars and in-kind contributions #2 Rule: Board and committee volunteer solicitors must give before they ask (e.g. in a campaign)

31 10 Ways that Every Board Member Can Participate Providing names of potential contributors Providing names of individuals in their networks that they can support in bringing into the prospect pool Making introductions to prospects & cultivating these prospects Visiting prospective donors, alone or with staff leader Taking prospects or donors on tours Making follow-up calls to prospective donors Engaging current donors Hosting friendraising events to share the mission of your organization with friends & colleagues As appropriate, Making the Ask Speaking on behalf of the organization Writing handwritten notes to thank donors

32 Reasons why People Give The Art of the Ask 12 Powerful Reasons Belief that giving is the greatest gift of all Belief that all the money in the world cannot buy happiness Belief that there will always be someone less fortunate who needs money Belief that charity begins at home Belief that it is the right thing to do Desire to emulate others who give Experience of a life-changing event Instinct that this will be a wise investment Decision that accumulated assets have made it possible to give Desire to reduce taxes Pressure from a friend, peer or colleague to support a cause important to that person Need to be recognized

33 The Art of the Ask Laura Fredericks When you ask others for money, you are not asking them to give something up, you are giving them the opportunity to invest in your organization and to feel good.

34 Board Fundraising Keys to Success Work with ED to understand why more resources are needed and to structure campaign or asks Recruit board members with expectation to engage on behalf of your organization for resources & support Make it easy and fun & celebrate success Clarify the roles Support volunteers success information, tools, training, tours, events, follow-up support, specific requests Celebrate success every step of the way

35 Exercises & Activities for Boards 30 Second Elevator Pitch Out of all the organizations worldwide, why did or would you support us? (Organization name) is I am involved in (organization name) because.and I wholeheartedly support because

36 Webbing Exercise Confidential: Have you ever helped an organization get a gift of $500 or more Who in your sphere do you believe is capable of contributing a large gift to you organization Spheres Religious Politics Community groups/clubs/alumni associations/neighborhood groups

37 Fundraising Capacity Assessment Does your organization have a foundation for fundraising? Strong database Events or cultivation opportunities Unique Brand Trust in the community Strong, impactful programming Regular development process throughout the year to identify, develop, cultivate and grow new and existing donors (someone to lead and to manage) Strong board development processes including bringing on new leadership and removing board members who are not contributing

38 Resources TCC Group - The Sustainability Formula From Small to scale Nonprofit Sustainability by Jeanne Belle Missionwise Earned Income: A Critical Source for Sustainable Nonprofit Health Organizations underwritten by the Healthcare Georgia Foundation The Ten Nonprofit Funding Models ls

39 Thank You and Good Luck Cindy Cheatham, VP Consulting

40 Appendix

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42 Nonprofit Business Models Instead of strategic plans that are different from a fundraising plan or business plan: Must consider financial viability and mission impact together Instead of considering activities individually: Are about how activities fit together and leverage each other

43 The Nonprofit Business Model Every organization has one whether you know it or not. Explains how a nonprofit generates and allocates revenue to accomplish its mission and remain financially viable. Nearly all nonprofits today are hybrids combining earned income with donations. Business models change over time. Businesses with the same services can have different business models.

44 Dual-Bottom Line Strategy Each activity has two kinds of impact: Mission impact (external) and Financial impact (internal) So a strategy for sustainability must be a strategy that combines both kinds of impact.

45 Matrix Map IMPACT PROFITABILITY

46 The Matrix Map Advocacy Experimental art Important, foundationfunded program Fee-for-service mission-aligned program that generates income Annual mail donations campaign Intensive event that does not make money Intensive program activity with light impact Martini Party Raffle

47 Determining Profitability Revenue Assign restricted and generated revenues to each business line Expenses Include full costs: Program Costs Shared Costs Admin Costs

48 Examples of criteria Relative Impact Alignment with core mission Excellence in execution Scale or volume Depth Filling an important gap Community building Leverage

49 Affiliate name: Years Open Foundations (family and institutional) Corporate Foundations Corporate Donations Individual - small Individual - major Program Revenue In-Kind Donations Special Events Sponsorships Special Events Other Funding source that's a good natural fit Why it's a good fit: Funding source that's a good natural fit Why it's a good fit: Opportunities Why? ATL corporate their work in the community and capacity to use our service in kind donations we can utilize for our inventory, sell or share. We have the space to accept by virtue of warehouse space Individual Gifts They have never been truly marketed to BLT 3 to Programming CLT 3 to 10 Corporate CHI Not open yet CIN 3 to HOU 1 to Corporate Donations Program Income Special Events It's a reliable part of our model and Special grows in proportion to our volume, which events - is an indicator of the service we're sponsors providing. The better we do by our and other partners, the more we generate. We match most giving priorities because we serve so many types of agencies. We give them opportunities to volunteer and publicity Mission driven My Board like to plan events and network Tool Rush Foundations Event Sponsors This source is also directly ties into our effort to innovate, tailor a program to participant needs and execute creative strategies. Great chance to get people exposed to the TB. Donors have an outlet for tool donations which gets them good PR. By supporting us they support so many organizations. We need to define more corporate and individual donors at all levels. Grants, Faith based and individuals Foundations Special Events - Banking & Building on Our Community In-Kind Donors like to see capital items at work Sponsorships These categories need to swell while the foundations shrink, as we our in our fourth year and as we mature, sustainability needs to be illustrated. Grants haven't been a focus in the past. We have very little support from individuals currently. We have support from one church but there are so many others in the community who would support us if they knew about us. Untapped market for us The entry level is low and provides a solid foundation to grow donations. Big corporations understanding and backing the ToolBank mission PHX 1 to individual giving because people who volunteer can corporate understand the difference something like giving a ToolBank can have in their community Because corporations with a large volunteer presence in the community can understand the benefit of the ToolBank corporate donations receiving support from those larger corporate groups who have active volunteer groups, selling the benefit of the ToolBank to make their volunteer projects easier! PDX 1 to Family foundations Especially those that fit with our mission: community; volunteers; revitalization efforts; sustainability Special events Drives people to facility; provides an opportunity to feel and see the mission passion through the board and other key individuals; provides a positive, fun opportunity to engage Corporate donors, individual donors We will have most established metrics and value (projects/impact) to show - as well as increased visibility and awareness RVA 1 to Corporate Median Average ToolBank is setup as a corporate model of support and I continue to see this as a strength for our local ToolBank Individual It provides great diversification and is untapped in my estimation around the network but provides the greatest opportunity for growth See answer above under Individuals

50 Funding state of the union How will we grow or stabilize in the next five years? Current funders Source Decisionmaker Motivation Current capabilities Development staff/volunteers AND time spent on funding by nondevelopment staff Development staff/volunteer skills Systems TBG 13-Funding state of the union... 1