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6 Ways New Nonprofits Should NOT Raise Funds

So you want to start a new nonprofit. Great! Now how do you pay for it? Starting and operating a new organization is not easy… or cheap. And, how do you convince people to give to an organization that doesn’t exist yet or is just just getting started? Don’t let us scare you away just yet because it’s fully possible. But first, you need to know what not to do.

Raising money for your new nonprofit organization can be a gigantic, annoyingly difficult, pain. People are usually not throwing money at ever nonprofit that they hear about, nor at every nonprofit that even asks. You may hear ideas and strategies for raising money coming from many places. However, not all of them are something to attempt, especially if it’s the only method you choose to use for fundraising.

Here are some common fundraising methods that, if used alone or in a vacuum, can be a problem for your new nonprofit organization:

Grants can be a good source of revenue – and if you’re offered one or many, hooray! – but not usually for new nonprofits. Most foundations that give grants want you to have at least three years of experience so you can prove your program is working before they invest in it. Even when you have the three years of program data, trying to fund your entire organization from grants alone is not a good idea. Most foundations don’t want to fund your program year after year, and even though there are thousands of foundations out there giving away money, there are only so many that are the right match for your nonprofit. They might be restricted to certain types of programs, demographics, or locations. Besides, grant applications (stop me if this sounds familiar) can be a gigantic, annoyingly difficult, pain. There’s likely only a small amount of grants you are a match for, and you’ll need other sources to cover costs.

Statistically, fundraising events provide the lowest return on investment of any kind of fundraising. It takes extreme amounts of time and energy to organize and host an event, and that’s time your team might be able to put to better use somewhere else. The costs involved with putting on an event as a whole aren’t cheap, no matter what the event is. And then, to add insult to injury, small events don’t usually bring in very much money. Not to mention, but we will, what Covid has done to many if not most events over this past year. Events that weren’t able to go virtual mostly did not happen. If that was your primary source of revenue for the organization, you had problems.

While a well-timed, well-managed signature fundraising event has its place and can generate a lot of publicity and some much-needed funds, events are not going to completely fund your new nonprofit. If you do lots of small fundraising events, it will take time, money, and energy from the things you should be doing. Regardless of size, events can be a huge risk as a primary source of income, especially right now.

Frequently, to go along with the events section above, corporate donations are often given in support of a fundraising event. They are not as easy to get as you might think. Remember, corporations and businesses typically don’t give because they’re philanthropic (although, some are). They give because of what they get in return – exposure to their target audience, publicity, good will, etc. The best way to get a corporate donation is through a connection you have inside the company. Board members and volunteers can be a good source for these connections. When you know someone on the inside, they can champion your request and walk it through the internal steps for approval. However, even if you know someone and think you have an “in,” there are often strict rules and enrollment periods that can make getting the donation difficult. And, similar to grants, the donations aren’t automatically repeated every year. Just because you get a corporate gift this year doesn’t mean you’ll get another one next year.

If someone from this group isn’t already connected with your new nonprofit, you’re going to have a hard time simply asking them for a donation. Just because people have money doesn’t mean they’re going to give it to you. People tend to have their favorite causes, and not everyone gives to charity. It’s a bad idea to target people because of their household income. Instead, target them based on their values and interests. Remember, people only give to your nonprofit if they care about the work you’re doing. It’s better to target people because they are into the cause you’re promoting, not because of their net worth.

Crowdfunding has soared exponentially with the expansion of social media and the support of different platforms, making it fairly common place. However, online fundraising doesn’t work very well unless you already have a following. If your social media coverage isn’t roaring at this point, this might not be your avenue. Crowdfunding is not a “build it and they will come” model. No one wakes up in the morning and says, “I feel like giving some money away. What Facebook or GoFundMe or Kickstarter page can I find?” If you decide to try crowdfunding, you still have to publicize it and ask people to go there to give. On top of that, some people don’t trust crowdfunding websites, refusing to give to a cause they don’t know through a site they aren’t comfortable with – especially when the nonprofit is new or doesn’t have a proven track record.

You may have started this nonprofit organization using your own money, but unless you’re independently wealthy, paying for all of the nonprofit’s expenses yourself is a bad idea. People sometimes start out that way mostly because they didn’t want to ask anyone else for money, and it seriously limits the organization’s growth. Funding the nonprofit yourself is like digging a deep hole and jumping in. It keeps the needs for funds out of the view of others because no one else hears about the organization’s needs. And, it will be a huge task in and of itself to climb back out all alone as the hole keeps getting deeper.

When you approach the right people at the right time with the right message, you can get a donation. However, it all starts with finding the correct people. None of these listed methods are a bad way to raise money for your new nonprofit. Don’t misunderstand the idea being presented. Definitely try some or all of them! Just don’t do one of them thinking that one is the only answer. The important part is to diversify your approach.




Originally Published by www.501c3.org

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