Fund development is a critical component of the success and viability of a nonprofit organization.
Consider a multi-layered approach to fund development that includes activities such as grant writing, fundraisers, community networking, and mail solicitation.
Learn how to be creative and deliberate in your strategic planning when diversifying revenue streams.
Community-based organizations (CBOs) implementing evidence-based programs must be creative and deliberate in their strategic planning to diversify revenue streams. Like the economy, philanthropic support ebbs and flows. Many CBOs have survived temporary economic downturns, but most are at some level of risk during economic upheaval. Per a recent study, as many as one-third of U.S. nonprofits may be at risk of closure due to economic havoc related to the COVID-19 pandemic. This factor makes the case for creating an interwoven fund development plan to shore up community-based organizations during a challenging times and beyond.
The rapidly shifting landscape in which evidence-based programs are being offered requires organizations to be steadfast in designing financing options to ensure program sustainability. Diversification of partnerships, program offerings, and funding streams have been encouraged by the Administration for Community Living (ACL) and discussed throughout the field.
Traditionally, fundraising activities encompass a combination of many tactics like applying for grants, hosting special events, mail solicitation, and community networking, among others. But these efforts can come up short. And, targeted increases for Older Americans Act Title III-D federal funding in the American Rescue Plan will not fully cover the costs of evidence-based program expansion. This combination of factors puts established programs at risk for termination at the conclusion of federal, state, or local grant awards, ultimately leaving communities in need. Strengthening outreach and engagement from corporations, government entities, and philanthropic organizations can go a long way in helping community-based organizations leverage funding, create sustainability, and support to further their mission.
Fund development is a critical component of nonprofit organizations’ viability. A well-defined and executed fund development strategy is a solid lifeline for CBOs implementing evidence-based programs.
As part of the evolution of community-based services, organizations must enhance their strategies to secure braided funding support— the utilization of multiple sources of funding including state, federal, and private streams— to create sustainable programming in their communities. Non-governmental funders are increasingly seeking the same commitment from grant applicants.
As defined by TSNE, fund development is: "…the ongoing strategic positioning of an organization to sustain and grow its resources by building relationships with those who understand and care about the organization’s relevance to the community. Building these relationships requires creating a shared vision, clear articulation of mission, creative strategies, and a solid communication plan."
Fund development is a multi-layered organizational function that impacts both the top and bottom lines of an organization’s financial and operational success. Organizations must invest in savvy fund development staff to support a robust plan. Moreover, a minimum of 20% of community-based organizations’ executive directors’ time should be devoted to fund development. Community-based organizations’ governing and advisory boards should include representation from corporate and philanthropic entities that are aligned with the agency’s mission and prepared to invest in the organizations’ success. One of the staples of fund development sustainability is grant writing, which is a reliable tool in an agency’s financial toolkit.
Grant-based funding supports nonprofit agencies in a variety of ways, from purchasing laptops for underserved seniors to programmatic expansion to operations management. Some grants even target infrastructure development and augmentation to maximize the recipient’s long-term performance capacity.
Putting in the time to research potential funders is essential to the successful targeted grant-seeking approach, Townsel noted.
Cheryl Townsel, SM, is a management consultant and has provided expert technical assistance to organizations across the country. Townsel has a methodical approach to supporting clients’ grant management process. She recommends instituting a comprehensive grant management program that emphasizes 6 key steps:
- Utilize a grant readiness checklist to facilitate assessment and preparation for grant applications and improve your organization’s ability to respond to time-sensitive opportunities.
- Define your organization’s mission-driven goals in three key areas: Development, Programmatic, and Financial. Vetting of potential funding opportunities involves alignment of your organizational mission and programmatic goals, organizational capabilities and capacity with specific funding opportunity eligibility requirements and program requirements to leverage the best fit. Invest the time and resources to hone your mission and vision statements, programmatic and funding objectives, experience description and capacity. TSNE recommends following these basics:
Describe your organization’s relevance to the local community in terms of mission, purpose, vision, and need. Define the key strategies, programs, and activities for fulfilling your mission. Make clear the connection between the organization’s core cause and relevance to the community, the interests of your current and potential donors, and the interests of other community stakeholders. List all of the resources that will be required to implement strategies, programs, and activities. You should include the people that are needed, the time they will spend, the equipment and facilities they will need, and the administrative overhead that will be attributed to running the project. Clearly delineate the cost of all the resources.
- Decide whether to use in-house grant management experts and/or external consultants. Some grant makers have adopted the progressive strategy of offering paid grant writer support to CBOs who are pursuing competitive federal funding opportunities. Expert assistance can elevate proposals by traditionally under-represented CBOs to compete at the national level.
- Implement a targeted grant prospecting and vetting process. Organizations that commit time to research and engage with potential funders gain valuable insight into targeting the right organization. She encourages CBOs to include ongoing grant prospecting and research in fund development strategic plans. Townsel also pointed out that zeroing in on targeted donor organizations that match best with your mission and vision helps increases your success. For example, you should determine if the targeted funder has a history of funding organizations and projects like yours. Often this can be determined by reviewing funders’ annual reports and/or IRS990 filings. Funders are likely to favor coordinated efforts among like-minded organizations as these collaborations help to leverage resources and maximize impact. Consider identifying and collaborating with community partners as you are developing your fund development strategies.
- Implement a strong organizational grant response strategy. Townsel recommends that CBOs take advantage of non-profit/charity registries to expand their online visibility and to facilitate funder research. Increased online visibility is useful as many donors and funders use not-for-profit databases like GuideStar and Charity Navigator, to research and gain insights into organizations and vet potential grantees as they make educated grant-giving decisions. Some funders require grant-seeking applicant organizations to have an organizational profile registered in one of these databases. Townsel cautioned that very careful consideration should be given to this critical step as part of comprehensive grant readiness preparation. Similarly, savvy grant-seeking organizations research and identify potential funders using these databases that provide up-to-date and comprehensive information about grantmakers and the grants they have made. The connection with local community foundation coordinating entities such as the Community Foundation of Southeast Michigan or the Health Foundation of Central and Western New York can be especially advantageous as they are most often concentrating their support on local entities.
- Strictly adhere to funding application requirements and the funders’ review criteria. Failure to adhere strictly to funder requirements can result in disqualification for further consideration. For example, if the guidance dictates that no more than 10% of the grant budget may be used for administrative costs, applicants whose budget forms fail to adhere to this criteria may be screened out and eliminated for further consideration.
- Include plans for post-award implementation and oversight. Establishing reporting, performance indicators, and general engagement with the funders after the award are an equally important aspect of grant management. Defining standardized reporting, performance metrics, communication frequency, and general administration for the award is essential to grants management performance. When well-executed, this critical aspect can be a boost for future support from funders. Organizations can use the positive outcomes from existing awards to highlight their capacity to meet and exceed funder expectations in new grant applications.
Success Story: Mid-America Regional Council
Mid-America Regional Council (MARC), a community-based organization based in Kansas City, Missouri has emerged as one of the nation’s leading community integrated health networks (CIHN). They have a service agreement with a large healthcare provider and are in negotiations with several others. James Stowe, MARC’s Director of Aging and Adult Services, has spearheaded the development and design of the integrated network and leads the health care contracting initiatives. Stowe notes that a key component of their infrastructure development was a focus on strategic relationships with local philanthropies.
Early on in their organizational development, Stowe was successful in securing significant funding specifically targeted at infrastructure development.
Stowe noted, “We recognized the need to invest in a solidly developed infrastructure as a means to sustain any new business.”
The MARC team determined that the best course of action was to begin with a well-defined description of the organization’s operational needs and the related costs. They identified areas of focus such as technology, staffing, and legal services. MARC committed to an 18-month time frame to allow their organization to be fully functional before contracted services commenced. MARC’s strategies included the formation of a multi-faceted stakeholder committee that was engaged in planning and development activities. MARC also contracted with several consultants to augment the industry knowledge and expertise of the staff/stakeholder committee.
The infrastructure funding was provided by a few rounds of grants from several philanthropies in the Kansas City region as well as some health care foundations and organizations. In addition to the infrastructure costs, some of the grants provided financing for software, equipment, supplies, and vehicles.
Stowe’s team is now setting their sights on securing program evaluation funding. He explained that there is a need for more science on the implementation of these integrated care contracting models. This is an emerging field in academic research circles. The goal is to provide outcomes data that speaks directly to the value of community integrated health care initiatives in terms that are relevant to various stakeholders.
The sustainability of CBOs depends on framing and executing a well-grounded strategic plan. That plan should address the diversification of revenue streams that support program stability and growth. The establishment of a robust fund development plan is central to a CBOs financial well-being.
This project was supported, in part by grant number 90CSSG0048 and 90FPSG0051 from the U.S. Administration for Community Living, Department of Health and Human Services, Washington, D.C. 20201. Grantees undertaking projects under government sponsorship are encouraged to express freely their findings and conclusions. Points of view or opinions do not, therefore, necessarily represent official Administration for Community Living policy.