Revenue Development – The Key Element In Any Successful Organization
| Posted in Management on May 15, 2012 by |
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What is necessary for successful revenue development for your organization? This is the integral question that all nonprofits must answer to experience the highest levels of financial success - and the answers span a large variety of sources and categories.
But before you can even consider the various sources of funding and resources, there are a number of questions that need answers first. Furthermore, taking the time to ensure that the answers are the RIGHT ones is worth the investment because these are the same questions that many funders will be asking before writing a check.
Solid, stable organizations are the ones who attract and KEEP funding. People want to be on a winning team. Therefore, showing that yours is that team will help you to create a sustainable future for your organization.
To get started, you need an honest assessment that helps you learn:
What is the board’s role in revenue development? How does this compare to the staff’s role?
How do the board and staff interact to accomplish revenue goals?
How competent and committed is your board to revenue building?
Is there a culture of fundraising within your organization that directs board and staff? Or are they resistant and maybe a little scared to get started?
Does the executive director have a very strong understanding of nonprofit leadership and management? Does he or she need training or development in any area?
Has the ED built a strong leadership team for the organization? And are future leaders being developed? Is there a succession plan in place?
How much confidence does the ED inspire in the organization, both internally and externally? Is his or reputation in the community benefitting or hurting the organization?
Does the board regularly review financial reports and have a good understanding of them? Do they ask questions during meetings?
Does your accounting system have a detailed chart of the accounts? Can you track donor funds and make sure they are being used properly?
Are internal roles and segregation of duties regarding financials firmly established?
Is your mission clear, compelling and succinct?
How are program outcomes tracked and documented, and are the successes replicable?
That’s a lot of questions that need answers, and each one is critical to your success. Having outside help to find the answers may be necessary, since once again – revenue development is VITAL to your overall success. After answers to the above questions are identified, other questions emerge:
How diversified are your funding sources? Is any single funding source providing over 20% of your annual budget?
Do funding sources include private donors, foundations, and entrepreneurial efforts, and fundraising events?
Are community partners involved and supportive of organizational programs and initiatives?
Once you have answered these questions, it is easier to determine what funding options are best suited for your organization. Though there is a whole universe of opportunities available, not all of these opportunities are realistic options for every organization. Let’s start by looking at the broad categories of funding sources available to most nonprofits.
MAJOR SOURCES OF FUNDING
There are three major categories of funding for nonprofit organizations. They are individuals, institutions, and your own entrepreneurial efforts.
INDIVIDUALS
Individuals contribute more charitably than any other category of philanthropic funding. This is a HUGE opportunity for many organizations; however, it takes effort and strategy. I encourage my clients to develop strategies that focus on relationship building - because people give to people. As Dr. Ronald David from The Kellogg Foundation eloquently stated, “Relationships are primary, all else is derivative”. For effective fund development, today’s nonprofits need to develop strategies to identify, connect with, nurture, and engage people. In this context, that means focusing on interpersonal relationships, and finding strategies to make people “care” enough to get involved.
In addition, one emerging way to connect with people that some nonprofits may not be proficient with is the quickly growing trend of online giving. People have become quite comfortable with financial transactions online, and online giving allows individuals to make an exact second decision and follow through with it immediately; obviously a major improvement on previous methods. Thus online giving has become a good way to get individuals involved in your cause.
Websites, social media – especially including Facebook – as well as crowd sharing, online contests between individuals, and giving challenges are great ways to engage these individuals online. Having a well-articulated plan is the best way to capitalize on this opportunity.
INSTITUTIONS
The next major category is institutional giving. It may come from a variety of sources, including foundations, corporations, religious organizations, or government agencies. These funding sources may provide seed and start-up funding/grants, general program support, organizational support, money for capital campaigns, or capacity building funding. Often, this category of funder requires much more detailed reporting. When seeking these funds, it’s important to make sure you have the appropriate accounting and tracking software in place to meet the funders requirements.
Many of the nonprofits I work with are heavily focused on institutional funding. And while I do believe nonprofits should include institutional monies in their overall funding portfolio, there are some things to consider. For example, it troubles me how many organizations become dependent on this source without a plan for sustaining the programs and services beyond the initial funding cycle. Most institutions do not plan on funding your programs forever. That means you should have a plan AT THE BEGINNING of the grant period as to how you will continue funding your services. You should also be working hard during the grant period to develop sustainable funding so that your clients, community, or cause won’t be negatively impacted when the grant comes to an end.
ENTREPRENEURIAL EFFORTS
The last major category is the entrepreneurial efforts that your organization may perform. These can include thrift stores or gift shops, providing day care services, landscaping, construction, other fee-for-service programs, rental of your facilities, or a myriad of other things. Launching into these efforts requires that you have someone on staff (or board) that has the skills and experience to manage this process. Venture Forth: The Essential Guide to Starting a Moneymaking Business in Your Nonprofit Organization by Rolfe Larson is a great resource for anyone looking to start an entrepreneurial effort at their organization.
Knowing your most accessible funding sources is one of the MOST important predictors of the success of your organization. It shapes everything else that follows, and getting outside help (if needed) to identify answers and build appropriate plans couldn’t be more important. Applegate Consulting can assist you in the process of identifying where your greatest potential lies in terms of revenue development. Over the next several months, we will be looking deeper at how to determine which of these opportunities is best for your organization.
Coming Next: Tapping into the Heart of Charitable Individuals
Tiffany Applegate is President at Applegate Consulting, she has provided thousands of nonprofits expertise and practical guidance for building, strengthening, and growing their organizations and increasing their impact. In addition to working directly with nonprofit organizations, Mrs. Applegate has served as a lead trainer for two federally funded capacity building initiatives and provides training and technical assistance for a variety of State and Federal programs. Get more information at ApplegateConsultingInc.com.
Tags:
Revenue Development Nonprofit Fundraising Donor Development Online Fundraising Rolfe Larson Applegate Consulting
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