Every organization needs money to operate. Nonprofits are unique in that they usually have to convince other people that what they are doing is worthy of their donation. Raising money is a continuous process for the nonprofit, and there are many different ways to raise money. The Bridgespan group, in an article posted on the Stanford Social Innovation Review, identified 10 different models for fundraising utilized by large successful nonprofits. By no means is this an exhaustive list or the only way nonprofit social ventures have been able to thrive, but it provides some of the time-tested and battle hardened methods for helping keep an organziation thriving in even the most difficult times.
The models have been categorized by Bridgespan according to their source of funding. The five themes are as follows: many smaller individual donations, large donations by few individuals or foundations, the government, corporations, and finally a mix of funders. Within many of these there are subcategories, which will be detailed below and combined they create the 10 models described above.
So, what are these ten methods?
- Heartfelt Connector - Kiva is the perfect example of a Heartfelt Connector in that they try to build relationships (visible or invisible) between donors and beneficiaries. The strong connection, which keeps people coming back to fund more entrepreneurs, allows Kiva to grow and thrive.
- Beneficiary Builder - Private universities are the best examples in that they charge for their services (an education/degree), but the costs are nowhere near covered by the service charges. As such, they rely heavily on previous beneficiaries donating in order to provide their products and/or services.
- Member Motivator - The organizations that utilize this model provide something that immediately benefits individual donors. For example, the National Wild Turkey Federation (NWTF) expands wild turkey habitats to protect and promote wild turkey hunting. It receives its funds through membership fees, merchandise, banquets, and other small forms of raising funds. The key is that individuals see and feel the personal benefit they receive from the organization, even though the organization serves a cause larger than the individual stakeholder.
- Big Better - This model is exactly as it sounds. It relies on one or a couple of large individual donations. While there are few organizations that utilize this model, a common example is found when an individual personally provides the money for the organization and heads the efforts to pursue its mission.
- Public Provider - BRIDGE Housing is an example of a Public Provider in that they receive funding from the government to provide a service that the government would normally be obligated to provide. BRIDGE provides low income housing in Northern California, and has grown to the point that they also search for additional funding sources.
- Policy Innovator - This funding model relies generally on an organization providing a more effective and/or less costly than a traditional government program. The reason why they differ from Public Provider is that they are not clearly compatible with existing government funding programs, and therefore need to use solid evidence to receive support for their program.
- Beneficiary Broker - Many nonprofits compete for funding in the Beneficiary Broker model because their goal is to provide a given service more efficiently and/or effectively to a variety of beneficiaries who are free to choose which organization they receive help from. This allows nonprofits to compete for government dollars, as they will have to prove they are the best option for beneficiaries to receive and utilize government resources.
- Resource Recycler - Your local food bank is a great example of a Resource Recycler in that they utilize individual and/or business donations of usually products to individuals who could not normally afford them.
- Market Maker - In markets that would be unethical to monetize, such as organ donation, Market Makers fill the gap. These nonprofits are able to provide services that would be scandalous or unlawful in a for profit setting, even though there is a great need for the services.
- Local Nationalizer - Your very own Gumball Capital generally acts as a Local Nationalizer. Our ability to raise money stems mostly from activities occurring at a local scale that trickles up and helps out at a national level. By focusing on providing great value at a local level, we are able to empower individuals to create big change in their communities and even nationally.
Which one do I choose?
Your choice for a model will depend largely on the type of service you provide, and may not appear immediately. If the first model you try doesn't work, try a different model. Maybe you can combine a couple at the same time and see which one works best. As long as you keep an open mind you should be able to stumble across a model that works for you, and it may not even be one of the models suggested above!
Even though this list isn't exhaustive, it does give quite a few examples of successful models. What wasn't discussed above, and should maybe be considered, is the idea of offering a product or service that provides revenue. The most important thing is to be creative, think about what needs you are trying to solve, and what will help you pursue your mission. By focusing on fulfilling the mission first and foremost, a fundraising model may fall into your lap, and if worse comes to worst, you can always reach out to local nonprofit executives for advice and help in developing a fundraising strategy.
Landes, William, Kim, Peter & Christiansen, Barbara. Stanford Social Innovation Review. Spring 2009.