Build Your Nonprofit's Funding Strategy: Balancing The Pillars of Fundraising

Author:

Amelie Heurteux

,

Customer Success Manager at Instrumentl

Reviewed by:

Published:

January 31, 2024

Last Updated:

January 30, 2024

A well-rounded funding strategy is critical for nonprofits. After all, what happens if that big funding source doesn’t come through?

In this article, we’ll discuss how to create a comprehensive funding strategy and the nine pillars you can choose from. By the end, you’ll be equipped to re-evaluate and enhance your approach to nonprofit fundraising so that you can secure more funds for your organization. 

Let’s get started!

Why It's Important to Have a Diversified Funding Strategy

Nonprofit organizations aren’t driven by profits and generating shareholder value. Instead, they are motivated to make a difference in the world around them. Still, they need money to help make it all happen, which is why they rely on fundraising to operate.

The most successful nonprofits leverage different types of fundraising strategies to safeguard the financial health of their organizations. A diversified funding strategy means you’re not overly reliant on one or two funding streams, increasing your organization’s sustainability.  

Pursuing different types of fundraising also helps you establish brand awareness with different stakeholders—whether that be corporate sponsors, major donors, or community foundations. 

Finally, a diversified fundraising strategy opens up your organization to a wealth of different revenue-generating streams (which we will discuss in detail below). There are many different ways to secure support for your nonprofit, and you wouldn’t want to limit your organization from potential funding opportunities because of a narrowed focus.

How to Create a Balanced Funding Strategy

A well-balanced funding strategy looks different for every nonprofit—though the composition of said strategy will largely depend on your organization’s size.

For example, smaller nonprofits often focus on building personal connections with their donors. They leverage these relationships in meaningful ways to develop resourceful, localized approaches. 

On the other hand, larger nonprofits have more capacity to operate on a broader scale, diversifying their strategies to go after bigger opportunities. They often can invest more resources and expertise into their fundraising efforts as a whole. 

However, regardless of your nonprofit’s size, a successful funding strategy requires the following elements.

  • A clear understanding of your organization’s mission and vision.
  • What you hope to accomplish throughout the year, and how much funding you need to make it happen.
  • A clear picture of your current donor base.

If you don’t have these written out already, jot them down. Pay special attention to the second point: what you want to do, how much you need to do it, and how you plan to get the funding. This should guide your entire funding strategy. 

Take a look at your plan. Does it look balanced to you? If not, that’s okay! You can always re-evaluate your funding strategy to integrate new sources of funding. Keep reading!

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The 9 Pillars of Nonprofit Funding

As you’re looking for ways to diversify and build your nonprofit’s funding strategy, you’ll want to consider the nine pillars of nonprofit fundraising. Keep in mind that not all of these areas will work for your nonprofit, but they’re still great to have in your back pocket just in case!

1. Donor Relations and Individual Giving

One of the biggest and most important funding opportunities for any nonprofit is its donors. These are the people who support your organization because they believe in your mission. They want to be a part of the change they want to see in the world. And, most importantly, they want to do it with you. 

It’s estimated that the largest source of charitable giving came from individuals who gave more than $319.04 billion in 2022 alone. That’s more than 64 percent of total charitable giving, so it’s critical that you focus on building relationships with your donors and leveraging their support effectively.

As you look to build your fundraising strategy in this area, you want to consider five core elements: 

  1. Major Gifts are your big-dollar gifts given by loyal donors, typically after a significant time investment to cultivate a relationship and build trust with them. Depending on the size of your organization, a major gift could be $1,000, or it could be $1,000,000. To learn more about major gifts and how to secure them, check out this guide
  2. Annual Giving is your organization’s yearly efforts to raise money to support your day-to-day operations. This could be your projects, programs, operational costs, and more. Annual giving campaigns are often run through solicitation letters, phone calls, and other outreach to your existing donor base.
  3. Planned Giving, also known as legacy giving, is typically a significant gift that is made to an organization after a donor passes away, usually as a bequest, trust, or annuity. While these gifts are often planned years in advance, it is a great strategy to foster deep and life-long relationships with your supporters. 
  4. Membership Programs are ways to entice the community to join with your organization, helping them feel part of an exclusive club. This membership can come with exclusive perks, flexible tiers, and more. It’s all about meeting our donors where they want to be—and making them feel special while doing it!  
  5. Donor Stewardship is a way to cultivate relationships with your supporters, most often after they have given a gift. When you make them feel appreciated and valued, it’s more likely that they will continue to support your organization. 

As you look to build your nonprofit’s funding strategy, identify if there are new areas where you can lean in with your donors. If it doesn’t work, you can always make adjustments as needed. 

2. Corporate and Business Partnerships

As part of their corporate social responsibility efforts, many corporations give back to their communities by funding nonprofits. Depending on the size of the company, these could be major gifts or smaller investments. 

Still, it’s important to identify opportunities for partnerships that can help provide funding for your nonprofit. 

Two common ways that corporations typically support nonprofits are:

  1. Corporate sponsorships, which is when companies directly partner with nonprofits to fund programming in exchange for positive brand recognition. For example, the San Antonio Food Bank’s annual Turkey Trot 5K was sponsored by local businesses whose branding was featured on the runner’s bibs, finish line, and more. 
  1. Cause marketing, which is when a company donates a portion of their sales to benefit a nonprofit. For example, Funko Pop offered a Hello Kitty figure with a special breast cancer ribbon in partnership with BCRF. $10 of the $15 purchase price went to fund life-changing research.  

3. Foundation Funding

There are many private and public foundations who offer funding to nonprofits through grants, though you have to apply to receive them. 

For example, the Ford Foundation funds the fight against inequality on a global level, and they award grants throughout the world on an annual basis. If you miss the application window, you need to wait until next year. 

Pro Tip: Instrumentl has a great grant database where you can search for potential grants, view form 990s to see past grantees, and more. 

4. Government Grants

Government grants are tax-funded and awarded to organizations who are serving the greater good. That applies to most nonprofits, which means these awards are quite competitive. 

For example, the National Park Service offers grants that help preserve historic places, as well as support the continued upkeep of our natural resources. You have to go through a rigorous approval process to qualify, and if you land a grant, there are robust guidelines you need to follow to maintain compliance. 

Depending on your nonprofit’s mission, federal grants can be a huge win, though keep in mind they can be challenging to secure.

5. Fundraising Events

Fundraising events are a fantastic way to tap into your creative side, bringing your donors together to raise money for your organization. 

Examples of common fundraising events are:

  • Silent Auctions
  • Galas 
  • Races
  • Car washes 
  • Bake sales

Keep in mind that many fundraising events have an upfront investment cost, so you want to make sure that the proceeds from the event exceed the cost to host it.

One way to do this is by charging for tickets to an event in addition to offering various fundraising opportunities during the programming, like the Aurora Public Library Foundation’s Winter Gala.

Many nonprofits also engage in peer-to-peer fundraising, which is very popular for 5ks and marathons. An individual may sign up to run, and they then have their own fundraising page where their friends and family can donate. 

6. Online Fundraising

Many fundraising events are in person, but there are plenty of online fundraising opportunities that you can partake in to help diversify your funding strategy. 

These include:

  • Crowdfunding, which is when a group of people pool their resources together to support a grassroots cause. This is common with GoFundMe and other similar crowdfunding platforms.
  • Email campaigns. You can have these be independent of your overall campaign or part of a larger strategy. With unique links, you can easily gather metrics about campaign performance to help you adjust your strategy as needed. 
  • Social media fundraising. Many social platforms have integrated ways for followers to easily donate to your cause, or you can direct them to the link in your bio to donate directly with your organization. Sometimes social media fundraising can go viral, like the ALS Ice Bucket Challenge.

Unlike in-person events and printed collateral, online fundraising doesn’t have as much of a cost associated with it, so you can try new things on the fly to see what works for you.  

7. Income Generation

You can also generate your own income as a nonprofit, and two of the most common ways to do so are through earned income ventures and in-kind donations.

Examples of earned income ventures could be merch sales, renting out space, offering consultations or trainings, and more. A great example of this is the shirts that the Central Texas Food Bank sells on their website to support their cause. 

In-kind donations are non-monetary donations given to your organization, such as gift baskets, sports tickets, memorabilia, and more. They have value and are often auctioned off—the proceeds of which are used by the nonprofit to fund operations. 

8. Capital and Special Campaigns

Capital campaigns are huge fundraising undertakings to help make transformative change within an organization. This could be building a new building, renovating existing facilities, creating scholarship funds, and more. 

They often require a lot of resources to make them happen, so make sure that you’re fully staffed and up for the task. 

One example of a capital campaign is from the University of North Dakota. They recently launched a $500 million capital campaign to help drive innovation within the university and fuel future growth, and they’ll leverage their donors, alumni, community partners, corporate relationships, and more to help reach it. 

9. Endowment and Legacy Giving

Depending on your donor base, you may also be able to take advantage of endowment building. Endowments are typically assets that will accrue interest. These include:

  • Equities
  • Bonds
  • Other investments 

These are things that are worth money now, but if you let them sit and the interest accrue, they will be worth even more. They earn income by just sitting there, which makes them attractive to nonprofits.

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What Will Your Funding Strategy Include?

Each nonprofit’s funding strategy will look different, and there’s no one-size-fits-all approach. However, it is important to maintain a diversified funding strategy, using a mixture of the following nine pillars: 

  • Donor relations and individual giving
  • Corporate and business partnerships
  • Foundation funding
  • Government grants
  • Fundraising events
  • Online fundraising
  • Income generation
  • Capital and special campaigns
  • Endowment and legacy giving 

Instrumentl is a great resource to help you pursue grant funding that aligns with your nonprofit’s specific missions and funding needs. If you’d like to see what we can offer, sign up for a free, 14-day trial today

Amelie Heurteux

Amelie Heurteux

Amelie Heurteux, a Customer Success Manager at Instrumentl, works day in and day out training nonprofits and grant writers how to efficiently prospect new funders and streamline their grant tracking and management processes.

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