How to raise funds for nonprofits and charities

At Moore Kingston Smith Nonprofit Advisory, we often work with nonprofits and charities that are facing changing financial circumstances. This is the first in our series of articles that explore the seven different ways that you can respond in more detail. The first article looks at ideas on how to raise more funds outside of your usual activities for nonprofits and charities. On the face of it, this is a straightforward response to financial constraints, but it can also be one the hardest options to follow. Success is often dependent on being able to change.

Balancing risk with reward

When thinking about raising more money, you can either generate more income from your existing funders or generate new income from other funders. There is of course the hybrid option, or more income from more funders. This is the basic premise of an Ansoff matrix, also known as the Product/Market Expansion Grid – a strategic planning tool that helps plan and evaluate growth strategies, and is a helpful starting point to raise funds for nonprofits and charities.

Doing more of your existing income-generating activity is the safest option but may not result in sufficient income. Risk, and potential reward, increases as you develop new income-generating activities for your existing audiences (i.e. asking lottery players to make a one-off Christmas donation), or new audiences for your existing activities (i.e. entering the student rag week marketplace with some challenge activities). The riskiest, but potentially game-changing, opportunities will come from new income-generating activities aimed at new audiences. In the commercial world, disruptors such as Uber or Netflix have found gold in the bottom right segment of the Ansoff matrix. Gamifying fundraising programmes has seen success for some charities. However, it is important to factor in the time it will take for investment in new income generation to cover its costs.

Flex your assets

Ansoff is a useful tool, but another approach is to think about what your assets are and how you can use them better to raise funds for nonprofits and charities. To do this, it may be necessary to take a different and more commercial perspective, which does not always sit within charities. This is particularly true of those that have predominantly been funded by statutory bodies.

Successful income generating cultures

The main barrier we see to raising funds is often organisational culture. Fundraising charities need a business model that works hard to define a case for support that will appeal to a mix of donor types. Trading charities need an ‘internal DNA’ that understands which ‘customers’ will buy which charitable ‘products’. Commissioned service charities are good at managing contracts but struggle when they those contracts are diminishing. In a world where nonprofits are increasingly adopting composite business models with fundraising, trading and commissioned services all working together, being successful will involve encouraging entrepreneurs to work alongside contract managers, building a culture in which collaboration breeds success, and where income generation can be balanced against creating the most social value.

Raise funds for your nonprofit or charity

To find out how your nonprofit or charity can raise more money, contact our team.