Answer To Nonprofit Funding Dilemma

A paradigm shift needs to happen in terms of where the money comes from. There is too much reliance and dependency on third-parties to handout grants and funds.

by | June 18, 2013       << Back to Blog    

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This month I attended a very informative public forum by the 2013 graduating class of Bergen Leads (www.bergenleads.org/class-project).  The title of the presentation was “The Future of Nonprofits: New Strategies for the New Normal”.  The class presented the landscape, trends and challenges faced by nonprofits.  The presentation ended with recommendations for successful nonprofit strategies based on months of research, seminars, site visits and interviews.

Key Takeaway:

  • There is an increase in demand, and a decline or stagnant funding
  • Collaboration is key amongst nonprofits
  • Taking risks and increasing innovative thinking is crucial
  • Worry less about overhead and focus more on the positive outcomes
  • The need to invest and to expect ROI

Forum moderated by Nina Stack

In my experience helping nonprofits with their technology needs, I have witnessed first hand the challenges they pointed out in terms of limited resources and funding.  As an entrepreneur and business owner, I can relate to the Bergen Leads class recommendations that appear “business-minded” to some extent.  In fact, one of the presentation slides quoted the late Steve Jobs in regards to innovative thinking.   When nonprofits don’t operate  as businesses, they fail to realize that nonprofits are in fact businesses and need to be run as such in order to be successful.  Nina Stack, president of the Council of New Jersey Grantmakers said it best at the forum… “Nonprofit is a tax-status, not a business plan”. 

Although there is a definite need to be innovative, there is no need to reinvent the wheel and start from scratch.  Nonprofits can at the very least take heed in what successful for-profit businesses have been doing for years and tweak them according to their own nonprofit culture and missions.  However, be careful not to copy marketing tactics without a plan.  Instead, focus first on creating a marketing strategy and plan to reach your objectives; then implement the tactics that are relevant.   If you have taken grant writing classes, you are one step ahead.  I would go a step further and take marketing, finances and other business-related courses.

In my opinion, there is a generation gap in many nonprofits and a paradigm shift needs to happen in terms of where the money comes from.  There is too much reliance and dependency on third-parties to handout grants and funds.

My Recommendation To Nonprofits:

  1. ‘Create’ More Traditional Funders.  As illustrated by the chart on revenue sources, private contributions and grants are a very small portion of the pie.  There is a saying that says ‘in a hurricane, even pigs can fly’.  This means that given the right conditions it is easier to be successful.  In today’s tough economy, especially since 2008, you really have to be your best and work harder to achieve the same level of success you may have had years ago.  What drives organizations to become ‘funders’ anyway? For some it may be the tax deductions, others may be their mission to give back to the community, others may be the cost of marketing themselves and public relations.  Whatever the reasons, nonprofits need to grab the bull by the horns and actively 'create' the demand for funders instead of simply sifting through funder directories and competing for the limited funds with each other.  This needs to be done with a well thought out marketing strategy and the right technology to be the most efficient.  It’s not a simple matter of approaching businesses and asking them to be a funder.  With success comes other problems that you need to plan for as well.  For example you have to understand the economies of scale and learn to manage ‘micro funders’.  The right technology also plays a significant role in this.
  2. ‘Redefine’ The Corporate Funder.  The 'new' funder no longer needs to be the company that provides a single big fat check.  Collaborate with smaller for-profit businesses in an ongoing strategic partnership.  Think outside of the box, take risks and go beyond the old fashioned fundraising ideas.  For-profits and nonprofits don't need to conveniently avoid each other and be polar opposites. Think of innovative ways to collaborate with businesses that are hungry for new business as you are hungry for funds.  Think beyond the corporate sponsorship that requires businesses to give lump sums of money upfront.  A win-win partnership can exist without creating conflict of interest or interfering with your social agenda or tax-status.

Congratulations to Bergen Leads class of 2013 for raising awareness of the nonprofit issues at hand and for offering the great recommendations.  Job well done!



About Fernando Sosa
Fernando Sosa is a technology consultant, project management professional, and software developer who helps small businesses and nonprofit organizations make the most of their information technology resources.


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