In Start Your Own Nonprofit Organization, the staff at Entrepreneur Press and writer Cheryl Kimball explain how you can launch a successful nonprofit organization, whether your mission is feeding children, preserving history or any of the other myriad goals nonprofits set out to achieve. In this edited excerpt, the authors describe half a dozen sources from which to seek donations for your nonprofit organization.
Writing grant proposals is an important fundraising source for most nonprofit organizations. However, it is certainly not the only way nonprofits can attempt to raise the money they need to achieve their missions.
Here are six other ways you can generate nonprofit funding:
1. Events. Fundraising through events is extremely common in the nonprofit world. Open a weekly newspaper and you will find any number of local events being put on by nonprofits. Events are great. They engage your constituents and allow people to become involved with supporting your organization at almost any level.
The kinds of events most often put on by nonprofits include:
- Runs and walks where participants pay a certain set amount to enter but also are encouraged to obtain other donations from friends, family, and colleagues
- Dinners that might include a speaker, live and silent auctions, and other ways to earn money from the event
- Online auctions
- Holiday-themed events such as haunted houses, Santa events, New Year’s galas, fall festivals, Valentine’s Day chocolate-related activities, and many other possibilities
- Casino trips, bus tours, etc., are all great fun and can be great publicity, and many can be great fundraisers
2. Earned income. Earned income refers to fees charged for services you offer or revenue from goods your organization sells. If your nonprofit is the type that has a physical space, then having some amount of retail is probably a good idea. Patrons of museums want and expect at least a small store where they can purchase souvenirs of their visit, postcards of their favorite piece of art in your museum or simply high-quality and unusual gift items.
Be careful of earned income and keep track of the percentage of your organization’s income that is through goods and services; there are lots of variables, but the IRS has very specific rules on how much of a nonprofit’s income can be earned before you no longer are operating like a charitable organization.
3. Annual appeal. A nonprofit’s annual fund is made up of donations given without any restrictions as to what the donations are used for. The annual fund is raised through a direct appeal to the widest possible audience--from known regular donors to occasional donors to haven’t-yet-donated prospects. This appeal usually goes out in direct-mail format in the late fall, hitting people at the holidays when they're feeling the most generous and looking ahead to the end of the calendar year and the benefit of a tax deduction.
4. Membership. If your organization is such that membership makes sense, by all means, offer membership. Rolling membership refers to when the membership renewal is one year from the date of joining. This means that membership income is coming in at almost every month of the year. It also means that someone has to be sending out renewal notices all year long. This sounds ominous, but even the simplest database can help keep track of this.
Memberships that are renewed on a one-time-of-the-year basis get an appeal-type mailing. The advantage to this is that you can time your membership appeal to bring in donations at a time of the year other than your annual appeal, helping your cash flow. A key disadvantage is that it's easy to forget about membership at other times of the year, resulting in often not capturing members who have let their membership lapse for a couple of months. And you may be losing new members who find out about you and your membership opportunity in April, but your membership renewal is once a year in September. They may not want to join in April for just a few months but decide to wait until September--but they aren’t in your database and they forget and so they never join.
5. Planned giving. Planned giving gets the classic brush-aside--that means talking about death. The best way to get over that is to stop approaching it as a talk about death. Approach planned giving as an opportunity for donors who care about your organization to have a lasting positive impact on your organization. Many nonprofits call their planned giving campaign a “Legacy Society.” People are quite interested in leaving a legacy in an area they care about deeply.
6. Capital campaigns. A capital campaign refers to a campaign to generate donations for a specific initiative, such as a new facility to replace your aging one or a new large-scale program. The campaign is typically of a finite time period, designated by either when you collect the targeted sum or a specific time frame.
The so-called “silent phase” of a capital campaign is critical. This is the phase when board members and the director and anyone else who has been a member of the steering committees cultivate individual and corporate donors to contribute to the campaign early in a substantial way. These donations set up the success of the “public phase” of the campaign.
The public phase is where you go public with your plans and your monetary goal and announce the support you've already received in the silent phase. This is where it becomes clear how critical the silent phase is--this is the support that gives your general donor pool confidence that the campaign will succeed and is worthwhile.