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New Kid on the Block: Developing Your Funding Strategy as a Startup Nonprofit


New Kid on the Block: Developing Your Funding Strategy as a Startup Nonprofit

The number of nonprofit organizations in the United States alone is staggering. Voluntary nonprofit organizations in the United States serve nearly every interest and need under the sun. From professional societies and trade associations that seek to improve professional practice and standards to massive relief organizations such as the Red Cross that serve people around the globe to local community-service organizations, nonprofits touch every aspect of American life. While they may run the gamut in size, scope and mission, they all are designated as tax-exempt organizations by the IRS (usually 501(c)(3) or 501(c)(6)) and they all require funding—often in the form of grants.

While for professional societies, dues from individual members may help keep the ship afloat, funds from dues are rarely enough to actually move the ship in any significant way. The same is true for philanthropic or service-oriented nonprofits: donations, bequeathments, fundraising drives, and other sources of revenue are often just enough to keep the doors open but too little to enable the nonprofit to launch new programs and services or effectively deliver existing ones.

Entering a Crowded Landscape and Getting Noticed

Once you have your nonprofit incorporated, next comes the essential work of finding potential funders, ensuring they know who you are, and why you’re worthy of their time, and establishing a systematic, sustainable process for identifying and securing funds. Here are some tips to get you started.

Know thyself.

For you to be able to present yourself as a unique entity that is worthy of funders’ time and money, you must first be a unique entity. With very few exceptions, you will not be the only nonprofit in your specific area of focus. Know intimately what other nonprofits who share your focus do and how they do it. More importantly, see what they are not doing or are not doing enough of. For example, if your mission is to ensure that single parents below the poverty line have access to primary healthcare for them and their children, you may discover that a population in a certain geographic area is underserved or has different needs from their neighbors. Not only does this better enable you to provide programs and services to meet specific needs; it also refines your nonprofit’s brand.

Use the research on your “competitors” to refine and focus your mission and vision statements, your internal and external branding and marketing, and your overall organizational direction and strategy. What makes you different will often make you more effective in seeking funding, since more specifically defined parameters often result in more concrete and specific outcomes, which are attractive to funders.

Identify potential funders.

Of all tasks, this might seem the most daunting. Just as the number of nonprofits is dizzying, so too is the number of potential funding sources available to them.

Once again, this is where restricting your focus to those who came before you and are most similar to you will be both time saving and insightful. Take a look at the major, red-letter programs, services, and events produced by your main competitors. Inevitably, you will discover who their major sponsors are; in fact, as you compare more and more organizations, you may find that several of them share sponsors.

From here, you can begin to create a targeted list of potential sponsors and funders who may be receptive to your organization’s mission and focus. Learn more about these prospective organizations and find where your mission and programs intersect with their interests and needs. This will give you a solid foundation from which to build your messaging and “asks” to funders, tailoring each proposal to its specific audience for greater results.

Never make a broad appeal.

Especially if you serve a competitive marketplace, avoid broad appeals. Broad statements of need often work very well for public-facing campaigns, but they destroy the effectiveness of grant proposals—and may even elicit an eyeroll from the proposal reviewer who has already seen 20 proposals. The harsh reality is that everyone wants to save the world, so to speak, from the reviewer’s frame of refence. Don’t’ try to save the world. Instead, save your neighborhood.

Going back to the fictional nonprofit that seeks to provide primary healthcare for single parents and their kids, consider which of these is more effective:

  • “Our mission is to ensure that no single parent or their child goes without primary healthcare.”
  • “We work with primary care providers across the metropolitan area to ensure that single parents living under the poverty line in Jefferson County have access to twice-yearly checkups for them and their children, preventive and routine medical care, and access to specialists as needed.”

The first example could apply to thousands of nonprofits. The second one is unique and shows concrete problems and solutions.

Form a permanent fundraising committee.

Nonprofits are enterprises of consensus, their governance structure driven by volunteer leaders whose significant time and expertise lend invaluable skill, passion and experience to the organization. Among the most vital of structures in successful nonprofits are committees composed of people, often subject-matter experts, whose job is to steward an area of the organization. Working with your board of directors, find and select nonprofit fundraising experts who may be interested in serving your organization.

Your fundraising committee can work year-round to continually identify funding sources and, working with the board of directors and the chief executive of the nonprofit (often called the executive director), develop and execute fundraising efforts, including securing grants.

Recognize that grant writing is an entirely different discipline.

Grant writing is drastically different from other types of formal and persuasive writing. If you aren’t already very well versed in the art and science of constructing a grant proposal, don’t attempt to just improvise. Grant proposals are far too crucial to an organization’s future to leave to chance. Whether you want to fully outsource your grant writing, find a mentor to improve or enhance your internal capacity, or simply want a review of your grant proposals by a team of experts, Resource Associates can help.

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