<aside> What’s this about? A fundraising strategy details your plan for securing the financial support you need to execute your mission.

What do I need to do? Determine the appropriate fundraising methods and channels given your organization’s mission.

Contents

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Further reading

• Inspiring fundraising: Developing a fundraising strategy
• SBA: Small Business Innovation Research (SBIR)
• SBA: Small Business Technology Transfer (STTR)
• Gates Foundation: Grants to For-Profit Organizations
• Mide Blog: How SBIR Grants can Help (or Hurt) your Small Business

Regulator guidance

• IRS: Exempt organizations annual reporting requirements

Templates

• Donation receipt
• Donor database template

Databases

Donors we’re familiar with

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What’s a fundraising strategy?

A fundraising strategy is your roadmap for securing financial support in order to launch and run your organization.

Your fundraising strategy will evolve over time, and you don’t need a multi-year strategy locked in place at this stage. But you will want a strategy for raising funds, whether from grants or donations.

Considerations

Bear in mind the following considerations:

• During the early phase of launching your nonprofit, you may expect fundraising to occupy ~60% of your time (vs. 40% on operations). As you begin to scale after the first year or two, the amount of time you spend fundraising should drop to below 50%.
• Funds raised may be earmarked for certain purposes, which must be adhered to. For example, a donor may send you “restricted” funds with a note about how they can be used; likewise, a grantmaker may award you funds to execute a specific program. Funds raised that aren’t earmarked in this way can be used to general operations purposes, and are referred to as “unrestricted.”
• It’s vital to diversify funding sources and types, although this is less important in the very early stages of your organization. But, as you scale, you’ll want to avoid “audience capture” with your donors, and you’ll want to avoid relying on any single donor as a major source of funding. (They might change their attitude towards your mission or its execution, or simply run out of available money.)
• Engaging a dedicated fundraising consultant can be a useful step in consolidating your fundraising strategy. See our selection of recommended fundraising consultants in the database.

Possible funding sources

Funding sources for nonprofits come in four broad buckets:

• Donations
• Grants
• Endowments
• Revenue

Grants and donations are likely to be your most common funding sources. The sources of these funds have different trade-offs, which are worth considering. For example, foundations are more unpredictable, but good as catalysts; whereas high-net worth donors can be more consistent in the long term but less transparent.

• What about investment?

Soliciting donations & grants

Soliciting donations and grants is a fundraising strategy most suitable for nonprofits, as the income can be tax-deductible.

• Key nonprofit law terms

Identifying donors

If you’re just starting your nonprofit and you aren’t yourself employed by it yet, you need to avoid running afoul of Professional Fundraising law.

This means you may need to yourself register to be a professional fundraiser or take on personal liability.

Not all nonprofits can transfer money to all other nonprofits. This is important to understand for both:

• Choosing what sort of nonprofit your organization is; and

• Understanding who you can receive money from.

• Types of donors

• Prospect research

Writing a case for support

A case for support explains what your nonprofit does, why it's important, and why people should support you.

If you decide to engage a fundraising consultant, they’ll typically advise that you write a case for support as your first step.

This is because the very act of creating a case for support is a good way to engage potential high net–worth donors.

Fundraising consultants sometimes advise: “You don’t ask for money, you ask for advice.” The process of creating a case for support is a perfect opportunity to ask for advice from a potential donor. (E.g. “Dear donor, I’d love to get your advice on this document I’m working on to convey what we do as a nonprofit.”) That said, we don’t agree with this advice entirely — ultimately, if you don’t ask, you don’t get.

• Writing a case for support
• Example sections in a case for support
• Real-world examples from high-impact projects

Donor communication

It can be helpful to segment prospect and donors:

• This is likely going to be largely based on their level (or expected level) of giving (eg <$5K, $5-10K, >$100K, etc.)
• You can also can consider other factors like level of interest (i.e. two donors might be willing to give same amount but one might value a call talking through evidence of impact whereas another is happy just knowing the funding gap of the organization)

Then you can come up with different donor engagement plans according to segment. As we’ve seen, asking for feedback on a case for support is a great start, especially for high net–worth donors.

Once your donors have begun donating, it’s important to have a plan for maintaining donor relations. For higher tier donors, this might include offering calls to stay up to date with organizational developments. For lower tier donors, this might involve them subscribing to your newsletter, or otherwise featuring in your marketing strategy.

Finally, a key aspect to donor communication is thanking the donor for their support and letting them know how their donation has been used!

Applying for grants

Receiving & processing donations