Great question, important question. We recommend the following three steps or components of building a solid approach to diversifying fund development strategies:
- Understand your organization’s financial model thoroughly in terms of how the current funding sources actually support operations and programs and how costs are covered through funding sources and where the funding gaps are–what kinds of expenses do you need to raise money for and how much do you need? This is key to implementation of any fund development strategy–to building a strong case for support that builds confidence in current and potential supporters.
- Analyze your current fund development strategies. What funding sources are already in place and functioning, and how well are these functioning? This analysis, known as a fund development audit, should be designed to give you, your management team, development staff and board a clear picture of how your organization currently raises money, how effective these methods are and whether the staffing and internal systems are appropriate. A fund development audit should also include research and analysis of fund development strategies your organization might not be using yet, or current fund development strategies that could generate more income. A fund development audit may be conducted internally or by a consultant with specific expertise. The strategic fund development plan, the result from the development audit, should serve as a roadmap to improving all of your fundraising strategies.
- Prepare well prior to implementing any new fund development strategy. Make sure that the people involved in fund development have all the tools, resources, information and preparation they need, including:
- Compelling information and/or stories about the importance of your organization’s work, a clear statement of how much is needed and for what aspects of your work
- Appropriate training and/or orientation and the confidence to represent the organization’s fund development objectives
- Internal systems to manage contributions, acknowledgements, stewardship and other communications
Diversification of funding strategies is not easy by any means; however, it is essential for most nonprofit organizations. The three steps outlined represent a good approach to diversification and can lead to improvements in current fund development efforts as well as plans for pursuing new funding sources.