Diversified revenues are crucial for just about any organization, creating sustainability and resilience when a funding source runs dry. While human services organizations may have a substantial public funding portfolio, and many government grants require a private funding match, this does not mean that other sources of revenue – including earned income and philanthropic funds – should take a back seat in your funding strategy. In fact, I encourage you to think differently about philanthropy and its role in supporting human services providers.
Imagine you’re on the leadership team of a service provider that implements a highly effective program for returning citizens; clients successfully maintain housing and jobs, and avoid further justice-system involvement. A contract with the state Department of Justice makes up the majority of the program budget, with the balance coming from a Master Leasing initiative and one wealthy individual donor who gives annually. For the most part, the program is meeting the needs of the population it currently reaches, but there is zero capacity for expansion, innovation, or outreach.
The Board and leadership team is concerned with the long-term sustainability for the program, and next steps involve developing a strategy to diversify revenues for the organization. A discussion ensues around pursuing foundation grants as a key tactic for diversification. The leadership team considers which aspects of the program may be well-suited to private grant opportunities. Should you seek grant opportunities for direct program expenses like rent and food assistance? Or are foundations more likely to support a new outreach component focused on engaging those who are incarcerated before their release? Perhaps you should seek General Operating Support?
If invited to that debate, I would argue that public funds can and should be used for direct programmatic expenses, whereas there may be a unique role for private foundations to provide the funding needed to build capacity, test new ideas, and establish the evidence for what works.
My advice to the leadership and development teams at human services organizations: Do not primarily think of private foundation grants and other philanthropic contributions as a budget gap-filler. Consider where public funds can and should be used, and where private philanthropy can have a unique impact.
For example, social services organizations might focus philanthropic asks on:
Above all, the grant request most likely to be funded is the one that is aligned with the foundation’s own priorities, adheres to its proposal guidelines, and for which you have the encouragement of foundation program officers, Board members, or other decision makers to apply.
Is your organization ready to establish (or grow) a private grants program? The team at Elevate can help! Reach out to us at firstname.lastname@example.org to learn more about our work with nonprofits throughout the U.S. to build smart and strategic grants programs.
November 6, 2019
So how does one build a prospecting strategy? Below we’ve outlined a few steps to help you create or refine your plans.
The first step is to get crystal clear on what a good prospect looks like for your needs. We find that our clients often want to pursue new prospects, but don’t yet have a clear vision within their organization of what a well-aligned prospect actually looks like for the work they do. In our experience, an “ideal prospect” should share an interest in the audience you serve, the geographic reach of your organization, the needs of the community, and the type of support you need, to name just a few.
In building your list of these points of alignment, you’ll want to ask yourself both, “What do we have to offer a funder?” as well as, “What do we want/need most from a funder?”
While creating your “ideal prospect” profile, you’ll also want to consider what are the deal breakers for your organization. For example, many organizations have policies that ensure that any partners they engage with align on key values. Small organizations may not have the capacity for very robust data tracking that some funders require. What are those factors that might lead your organization to decline funding? You’ll want to do your due diligence in the prospecting phase in order to avoid a lot of wasted effort later in the process!
Using the “ideal prospect” profile you put together in step 1, you should then start to identify the criteria you’ll use to search for potential funders, and organize your internal research process based on your priorities. The greater the number of points of alignment you have with a funding prospect, the higher the probability that this prospect will be interested in supporting the organization’s work.
Once you’ve gotten clearer about what you’re looking for in a funding prospect, this is a great time to do a little research into your peers and competitors to better understand the field in which you are competing for resources. Who is funding your peers? For what projects? At what grant amount? Some of these organizations are going to be your best prospects, as well. (And remember, it is rare for a foundation to only award one or two grants per cycle, so if you are successful in going after a peer organization’s funder, you are not necessarily taking resources that would have otherwise been designated for the other organization!)
Once you’ve tackled these three steps, we recommend you also consider focusing on getting information and buy-in from your internal stakeholders – such as the organization’s leaders and program staff – to develop your strategy. Include them in this process! This could start with something as simple as developing a clear and concise summary of your prospecting strategy and sharing it internally for feedback.
Ultimately you will want to develop a process for identifying and qualifying prospects to ensure that you are pursuing the most strategic, actionable opportunities possible. Think quality over quantity! If you are successful in developing and executing an effective prospect research strategy, you’ll be well-positioned to spend your limited time going after those prospects that are the most likely to be interested in funding your work.
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