Are you a nonprofit that’s constantly running fundraising galas and events to raise the funds you need? Are you constantly writing grant proposals one after another with limited success? Do you have a small team that’s burdened with the pressures of running your mission while doing the heavy lifting for fundraising? Do you often run out of budget and have to cut down on project activities or lay off staff?
If your answer to any of these questions is a Yes, then you need to diversify your nonprofit’s fundraising mix and strategically rethink your strategy beyond the traditional or limited modes of fundraising. In this blog, we help you understand the benefits of diversifying your fundraising strategy and how you can get started. Let’s get started right away.
The Powerful Advantages of Diversifying Nonprofit Fundraising
Minimizing the Financial Risk: Overreliance on one or two funding sources is incredibly risky for your finances and your nonprofit’s long-term sustainability. Think about this – what happens if those one or two sources dry up? Economic downturns, changes in government funding, shifts in donor priorities, and changes in the regulatory landscape can all impact your limited revenue stream.
Diversification of your fundraising methods creates a safety net, ensuring the organization can continue its work even if one source declines.
Increases Resilience: A diversified strategy makes the nonprofit more resilient to external shocks such as economic downturns, pandemics, natural disasters, etc.
For instance, organizations that relied heavily on fundraising events struggled immensely for the course of the global pandemic. Organizations with more diverse sources of funds had a better revenue flow and were better equipped to weather the pandemic.
Expands Reach and Impact: Different funding sources connect you with different audiences. International grants and aid bring in larger funds, expertise, and evaluation support. Corporate partners offer greater funding, exposure, and brand visibility to nonprofits. Online crowdfunding help nonprofits reach a global audience beyond their limitations of geography. Charity challenges and social media fundraising bring in the younger generations’ support and so on.
So, having a diverse income source helps you broaden your network of advocates and potential donors.
Encourages Innovation and Growth: When you’re not solely dependent on one type of funding, you have more freedom to explore new ideas and pilot projects. This can lead to innovative solutions and greater impact.
Builds Brand Resilience and Recognition: A diversified fundraising mix increases your visibility across different sectors, demographics, and platforms, strengthening your brand. The increased visibility and awareness for your nonprofit makes it easier to attract new donors and maintain relevance even in the face of increased competition in the fundraising landscape.
Optimizes for Long-Term Stability: Many successful nonprofits have built their foundations on diversified funding before scaling up. It’s a strategic approach that positions the organization for sustainable growth and adaptability.
Enhances Organizational Flexibility: Being tied to a single revenue stream can lead to rigidity and may not be sustainable in the long run. Diversification allows for greater flexibility in how resources are allocated, enabling the nonprofit to adapt to changing needs and opportunities.
Diversifying Your Nonprofit Fundraising Mix: The How
Assess your current fundraising performance:
Look at your fundraising data, if any, from previous years to understand the performance of different fundraising methods used including corporate partnerships, sponsorships, individual donations, international and government aids and grants, etc.
Calculate the ROI of each of the methods by considering time, effort, and resources spent in gaining each source of funding. Analyse your strengths, weaknesses, and gaps in terms of each method of fundraising.
Segment your donors:
Take a look at your current donor base to understand demographics, giving habits, and interests. This will help you choose a fundraising mix that works for your organization and more effectively target your campaigns.
Explore different fundraising methods:
In addition to the methods you use, you must find other potential ways to engage different demographics and broaden your donor base.
- Online crowdfunding: A cost-effective and secure way to diversify your donor base and boost fundraising ROI
- Social media fundraising campaigns: Leverage the power of social media to raise awareness and funds by appealing to the younger generations.
- Charity challenges like the ALS ice bucket challenge that use the power of social media virality to build a community around important causes and raise funds.
- Recurring and monthly giving programs that offer a steady and sustainable revenue stream without lower donor acquisition costs and higher donor lifetime value.
- Corporate partnerships and CSR funds that help nonprofits build stronger relationships with socially conscious companies in their neighbourhoods and cities.
- Grants, aids, and sponsorships that most nonprofits already tend to devote resources on.
- Reimagined fundraising events where you consider smaller, more targeted events including virtual events
- Planned giving such as reaching out to those who are estate planning.
- In-kind donations, etc.
Remember that you cannot do away with traditional fundraising methods or focus on one or two modern methods. You need to have a good mix of different methods and strategies to boost your ROI.
Develop your diversified fundraising strategy:
- Set realistic goals for fundraising and don’t take up all the new methods all at once. Start with a couple of methods and keep adding more methods.
- Focus on methods based on your resource availability. Prioritize fundraising methods for which you have resources and expertise. Include methods like online crowdfunding that have a flatter learning curve compared to social media fundraising.
- Allocate resources including time effectively based available staff bandwidth and resources.
- Keep tracking and monitoring the performance of different fundraising methods.
Embrace Technology:
Leverage online crowdfunding platforms such as TALGiving to make giving easier and more secure for donors. Use CRM systems to manage and track donor data and fundraising efforts. Leverage multichannel marketing especially email and social media platforms to widen reach and amplify impact.
Stay Flexible and Adaptable:
Most importantly, stay flexible and adapt your fundraising strategies to the changing trends and best practices. Experiment with different approaches to understand what works best for your nonprofit. Based on key metrics and feedback from your team, regularly review and upgrade your fundraising strategy.
Here is a practical example of how a nonprofit can diversify the fundraising mix:
A small nonprofit with less than 10 staff members relies solely on fundraising events and big grants for their funds. They can diversify by:
- Leveraging online crowdfunding to raise donations from a wide range of individuals.
- Online crowdfunding using platforms like TALGiving is not labour-intensive and allows nonprofits to reach a broader audience without expending too much time, effort, and resources.
- Setting up is simple and so is tracking donations and offering updates to donors.
- The only catch is the nonprofit should complement their online crowdfunding campaigns with a social media and email campaign to get the word out and raise more funds.
- Implementing a recurring giving or monthly giving program.
- The nonprofit could engage its existing donor base and reach out to new potential millennial and gen-Z donors to contribute to monthly giving/ recurring giving programs.
- These offer a steady and reliable source of income that doesn’t lead to high spending or eat into limited staff bandwidth and resources.
- The nonprofit can set up an online donation page on its website or use crowdfunding platforms to run their recurring programs.
- Applying for small grants instead of solely relying on large grants.
- Partnering with local businesses for sponsorships.
- Appealing to local companies (within a 5 km radius) for CSR funds, volunteering partnerships, and in-kind donations.
Ready to take control of your nonprofit’s financial future?
Diversifying your fundraising approach empowers your nonprofit to build a more stable and sustainable funding base for your and allows you to focus on accomplishing your mission.
With TALGiving, a tech-powered online crowdfunding and crowdsourcing platform, you can seamlessly create and run online fundraising campaigns for absolutely free. It is secure and straightforward and allows you to raise other forms of support for your nonprofit including mentoring support, expertise, board membership, and much more. Explore the platform now: https://talgiving.org/
