exploring sustainable funding models for your organization nlp june 22, 2015 amy nisenson &...
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Exploring Sustainable Funding Models for Your Organization
NLPJune 22, 2015
Amy Nisenson & Marianne Vermeer
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Introductions
• Name
• Your Organization and Role
• The Best Movie You’ve Seen in the Last 12 Months
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Admin & Housekeeping
• Format of the course
• Timing and breaks
• Restrooms
• Dining options
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Your Objectives
• What do you hope to learn from this class?
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Learn about different funding models for your nonprofit organization
Using the matrix map as a tool Evaluate your org.'s sustainability based on your
funding model How will you begin to make changes towards
achieving sustainability Hear from 2 Richmond organizations that are
using the matrix model and how it has assisted them
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Sustainability
According to Wikipedia... “The capacity to endure”
•Ability to generate resources in the present without compromising the future (Financial Sustainability)
• Ability to develop, mature, cycle out programs to be responsive to constituencies over time (Programmatic Sustainability)
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Vision
Optimal goal and reason for organization’s existence
What are values and beliefs that inform work of organization?
What do you ultimately hope to accomplish as a result of efforts?
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Mission
Long-term direction that guides every aspect of organization’s daily operations
Nonprofit’s purposeGroups it serves/benefits from work of
organizationHow it plans to do so
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Exercise
Pair up with 2 other persons—15 minutesShare your organization’s mission statementShare your organization’s vision statementIs your organization on mission and vision?If not—why not?If yes-what are some accomplishments
towards mission and vision?Who is willing to share with the whole group?
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Strategic Plan
Road map for operational plan of organizationElements of traditional strategic plan:
Define or review the mission and vision of the organization
Carry out SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis to assess your strengths, weaknesses, opportunities, and threats
Define your goals and objectivesWrite the planDraft operational plansMonitor progress
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Business PlanShould be part of your initial planning process and makes the financial case for moving ahead. Must be able to justify the need for your organization, rely on continual revenue, and keep expenses under control.
Elements of a Business Plan:Executive summary: overview--who, what, where, why, and how.Organization description: past, present, and future activities/nonprofit alignment with missionMarket analysis: outside competition, pricing structure, and marketing planFinancials: multi-year analysis of revenues, expenses, and projected cash flows.Operations plan: outline of the daily activities, staffing, and general procedures.Appendices: Additional or back-up documents - Resumes of key staff, an organizational chart, market research results, a list of funding sources.
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Funding Model
Funding Model—
Defined as a methodical and institutionalized approach to building a reliable revenue base that will support an organization’s core programs and services
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Characteristics of a Funding Model
• Type
• Decision makers
• Funder motivation
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Type of funding
The model typically revolves around a single type of funding, such as
government or individual, which constitutes the majority of the organization’s revenue and which the organization invests disproportionately in developing.Staffing, marketing, core competencies are generally
defined by this fundingFunding needs to be appropriate for the work the
organization does- there is some logic to this! Other smaller sources often play complementary
supporting roles but are not the focus of investment
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Funder Decision Makers
Within that principal source of funding, the model focuses on a
particular set of people who dictate the flow of funds—perhaps government administrators or a
few wealthy individuals.
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Funder Motivation
A funding model takes advantage of the natural matches that exist between
funder motivations and a nonprofit’s mission and beneficiaries. These motivations range from altruism to collective interest to self-interest.
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10 Funding Models
1. Heartfelt Connector
2. Beneficiary Builder
3. Member Motivator
4. Big Bettor
5. Public Provider
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10 Funding Models
6. Policy Innovator
7. Beneficiary Broker
8. Resource Recycler
9. Market Maker
10. Local Nationalizer
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Heartfelt Connector
Funding Source: IndividualsFunding Decision Maker: Multitude of IndividualsFunding Motivation: Altruism
Unique Characteristics:•Broad mission appeal•Benefits touch funder’s family and friends•Nonprofit connects to donors through volunteerism
Fundraising Tools to consider:•Special events•Direct Mail•Corporate sponsorship
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Beneficiary Builder
Funding Source: IndividualsFunding Decision Maker: Multitude of IndividualsFunding Motivation: Self-interest, followed by altruism
Unique Characteristics:•Mission attracts individuals pursuing and paying for specific individual benefits•Benefits and mission tied to strong individual connection (4 years at University; saving lives)•Benefits created viewed as having important societal benefits
Fundraising Tools to consider:•Fees•Major gifts
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Member Motivator
Funding Source: IndividualsFunding Decision Maker: Multitude of IndividualsFunding Motivation: Collective Interest
Unique Characteristics:•Benefits have group orientation that creates collective community to tap into for fundraising
Fundraising Tools to consider:•Membership fees•Special events•Major gifts•Direct mail
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Big Bettor
Funding Source: Individual or FoundationFunding Decision Maker: Few individualsFunding Motivation: Altruism
Unique Characteristics:•Builds majority of support from small number of individuals or family foundations•Mission may take many decades to fulfill (finding cure to a certain disease)
Fundraising Tools to consider:•Major gifts
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Public Provider
Funding Source: GovernmentFunding Decision Maker: PolicymakersFunding Motivation: Collective Interest
Unique Characteristics:•Provides services that are perceived as core gov’t responsibility (foster care)•Clear definitions exist of the services and processes that nonprofits provide (RFPs)
Fundraising Tools to consider:•Government contracts
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Policy Innovator
Funding Source: GovernmentFunding Decision Maker: PolicymakersFunding Motivation: Collective Interest
Unique Characteristics:•Secures gov’t funds for a significant new approach to a problem or to address a problem not currently viewed as core gov’t. responsibility•Requires a high level champion•Succeeds when significant pressures exist on gov’t as a result of fiscal or medical crisis
Fundraising Tools to consider:•Legislative appropriation or earmark•Executive earmark•Government pilot project
Beneficiary Broker
Funding Source: GovernmentFunding Decision Maker: Multitude of IndividualsFunding Motivation: Self-Interest
Unique Characteristics:•Individual beneficiaries decide how to spend the gov’t benefit•Must navigate and influence gov’t decision-makers for eligibility and compliance with reimbursement requirements•Requires individual marketing capability to reach and service end beneficiary
Fundraising Tools to consider:•Government reimbursement
Resource Recycler
Funding Source: CorporateFunding Decision Maker: Few individualsFunding Motivation: Self-Interest
Unique Characteristics:•Nonprofit uses goods created in the market-economy where there are inefficiencies that create a surplus (food)•Sometimes the marginal costs to produce the product are low (pharmaceuticals)
Fundraising Tools to consider:•In-kind giving
Market Maker
Funding Source: MixedFunding Decision Maker: Mass of individuals (one side); few individuals (other side)Funding Motivation: Altruism (one side) and Self-Interest (other side)
Unique Characteristics:•A funder with some degree of self-interest and the ability to pay exists (a health system buying blood)•Often, one of the parties involved in the transaction is motivated largely by altruism (blood donor)
Fundraising Tools to consider:•Fees•Major gifts (corporate or individual)
Local Nationalizer
Funding Source: MixedFunding Decision Maker: Few individuals Funding Motivation: Altruism
Unique Characteristics:•The issue is one of a few top priorities for improvement or success in a locality (quality school system)•The issue is common enough to exist in many localities nationwide•The level of funding available in any single geographic area is usually limited
Fundraising Tools to consider:•Major gifts (corporate or individual)•Special events
Why are these funding models important?
• Nonprofits must understand their funding strategy and funding streams to raise money
• Knowing your funding model helps nonprofits focus more
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What is your funding model?
• Turn to the person on your right
• Share with him/her what your funding model is
• What are the sources of funding that your organization primarily counts on?
• Does knowing your model help you vision new sources?
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Profitability & Mission Impact
• No, it’s not an oxymoron… even non-profits have to be able to make enough money to cover their costs
• Be able to parse your activities and services- and their relationship to your mission and vision.
• Analysis of both financial viability AND mission impact
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Analysis: Part OneImpact Analysis
• First, be able to list your activities: your programs, services and fundraising activities- ALL of your activities!
• Second, quantify the impact of each program and service• Outputs, outcomes and impact: all important
• Outputs: what you do (# clients services, # training programs, # phone calls)
• Outcomes: what happens as a result of your outputs? • Impact: what has changed? How has the needle
moved for the problem you are trying to solve?
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Analysis: Part OneImpact Analysis
(cont’d)• How do you measure?
• How do these relate to the mission and vision of your organization?
• Rank the programs and services on the IMPACT they have on your target beneficiaries
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Analysis: Part TwoFinancial Viability
• Analysis of the revenues and expenses associated with each activity or service offered
• Objectivity in the process
• What does it cost to offer each service or program? Need to allocate overhead to each of the items listed in Part One.
• Rank the programs and services in order of financial profitability
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Matrix Map
• Put Parts One and Two together
• Provides a picture of where your organization’s programs and services help you meet your mission AND
• What combination of impact and profitability provides the best strategy for sustainability
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How to Map Your Organization
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Put your analysis on the Map!
High ImpactLow Profitability
High ImpactHigh Profitability
Low ImpactLow Profitability
Low Impact High Profitability
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Sample Matrix Map
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Panel Member
Harold Fitrer, Ed. D, President/CEOCommunities in Schools of Richmond, Inc.
CIS of Richmond surrounds students with a community of support, empowering them to
stay in school and achieve in life. CIS of Richmond works inside Richmond and Henrico
County Public Schools to help kids stay in school by identifying and addressing unmet
needs of children and families-needs that when left unanswered, contribute to the dropout rate.
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Panel Member
Mary Allen Waller, Board ChairLegal Information Network for Cancer
LINC provides a different kind of life support to people with cancer. LINC’s clients are
predominantly low-income and do not have the support network or resources to deal with the overwhelming financial and legal issues
that typically arise when dealing with a cancer diagnosis, treatment and survivorship.
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Questions to consider for Panel
• How have you used Matrix Map in your organizations?
• What has changed as a result?
• How would your rate your organization on its sustainability focus?
• What advice would you give to organizations doing this for the first time?
• What involvement has your board had in this process and in these discussions?
• Other Questions from class?41
How can your Board help with sustainability?
Board needs to take an active role in fundraising
• Ensure development plan and monitor progress.
• Create fundraising and donor recognition policies.
• Ensure fundraising methods adhere to ethical standards.
• Participate in fundraising.
• Monitor progress and evaluate outcomes.
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How can your Individual Board Members help with
sustainability?Individual Board members have their own responsbilities
•Make meaningful contribution
•Identify, evaluate, and cultivate prospects
•Make introductions
•Organize and attend special events
•Attend face-to-face solicitations
•Write or sign appeal letters
•Thank donors
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Does 100% of your Board contribute?
Why should the full Board make a monetary contribution?
•Demonstrates personal commitment
•Gives board members confidence to ask others to give
•Encourages other funders to give
•Creates board member “ownership”
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Can your Board articulate the Elevator Speech?
Elevator Speech•A compelling 30-second description of your organization’s plans, delivered as part of a two-way conversation, that educates and, hopefully, elicits interest from listeners.
•A critical component of success for an organization’s self-sufficiency and sustainability.”
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Can your Board help make the Case for Support?
Case Statement
•Focus on the results, not organization’s needs.
•Include clear, essential facts.
•Add a connection to the community.
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The Board’s Fundraising Responsibilities
apnconsulting2014/boardsource
• Define or clarify the mission
• Support organizational stability
• Identify strong leadership
• Approve adequate budgets
• Plan for the future of the organization
• Be familiar with the overall fundraising plan
• Participate in the fundraising process
Staff roles in fundraising to support the Board
apnconsulting2014/boardsource
Chief Executive (Executive Director)
• Works in partnership with development staff and board
• Primary representative of organization
Development Staff
• Manages day to day work of development
• Depends on what staff organization is able to hire and what duties are (i.e. Development Director will have different role if oversee staff such as grant writer, planned giving expert, etc. or if they have to do it all)
Staff roles in fundraising to support the Board
apnconsulting2014/boardsource
Development Staff or other staff (continued)
• Coordinates fundraising against development plan
• Manages process with support
• Prospect research
• Database management
• Gift recording
• Accounting
• Special event planning and oversight
• Coordination of fundraising entities within larger nonprofits
• Donor relations
Typical Fundraising Duties of the Chief Executive
apnconsulting2014/boardsource
• Serve as the organization’s representative to potential funders and the community
• Serve as a contact for donors
• Ensure compliance with funding sources and regulatory requirements
• Hire and supervise fundraising staff
• Initiate and assist the board in developing fundraising policy and setting priorities
How can board members help?
apnconsulting2014/boardsource
“When the paradigm shifts from asking for community support because an organization HAS needs to asking for support because the organization MEETS needs, the tin cup disappears.”
Kay Sprinkel Grace, The Nonprofit Board’s Role in Setting and Advancing the Mission
apnconsulting2014/boardsource
• Become trained in fund development strategies and techniques
• Get comfortable with “the ask”
• Help identify potential donors
• Involve staff at the start—let them know of any prospects you’re thinking about
• Commit to helping with a fundraising project
How else can board members help?
How else can board members help?
apnconsulting2014/boardsource
• Understand the importance that each interaction they have with others in the community is part of the development process
• Understand why they are on the board and what they can bring to the table
• Understand what the staff’s roles are and how they can assist them
Exercise
• Pair up with another person
• Share one or two ideas of how your board members can assist with your fundraising
• If you have no fundraising staff or limited staff, how does this change how the board members might assist?
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Takeaways
• What are your key takeaways from today?
• What will you take back to your organization?
• Other ideas or thoughts you want to share
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