Tuesday, February 18, 2014

Funding: An inside story (Part 1)

Providing leadership to a growing non-profit organization can be a maddening enterprise!

Don't get me wrong, I love the work I get to do every day.  I love my team.  I love our neighbors.  I love our supporters.

But, and maybe it's my prejudice for a "full disclosure" approach to about everything, this job is the hardest one I've ever had, bar none.

A huge part of that "hardness" factor relates to funding.  Forgive me, but it helps to talk about it--just to lay it out there for everyone to see.  This approach is sometimes frowned upon by the experts in philanthropy.  I mean, you just don't reveal everything when it comes to funding, development strategies or the financial threats that you inevitably face along the way if you are attempting anything worthwhile.

So, stay with me for a bit here as we consider a number of the realities of non-profit funding.

1.  Every year you must find a way to virtually, completely recapitalize your business.  This is especially true if you work in the human services/poverty space.  Cash reserves are nice and important, and very difficult to grow in view of the pressing and expanding human need that one observes all around. Basically, in this sector you grow accustomed (almost) to  having to build your wealth from practically ground zero every 12 months.  Thank God for great, good, consistent partners who journey with you in this world!

2.  The reality of differing kinds of funds with different uses can send you over the edge! Very little of the funding received is for general or unrestricted use.  Especially as an organization grows, more and more of the funding comes in the form of contracts, grants, or bequests that restrict and designate just where funds may be legitimately deployed.  So, an organization might have $1,000,000 in the bank, but none of it be available for use except in the special way its purpose is defined.

Imagine if your paycheck were restricted in such a manner. What if you could only use your pay for capital improvements or education or savings?  How would you cover more general operating expenses?  Possibly you would decide to get a part time job!  Non-profit management can feel about that scattered and desperate at times.  Hey, I'm just sayin'!

3.  Then, there are matters related to sheer scale, as in the amount of funding that must be acquired on an annual basis. Let's say your organization crafts an annual operating budget, not including any special capital or reserve efforts, that comes in at $11,900,000.  In real, pressing, "keep you on your toes and awake at night" terms, that budget calls for funding at an annual rate of $1,358 per hour calculated on a twenty-four hour/7-day week basis.

4.  Meeting your financial objectives and goals demands the development of a sophisticated strategy complete with a variety of fundraising tactics.  To raise $1,000,000 monthly you need some large gifts.  You also must be working on a basis of hundreds of smaller gifts.  Staying in touch with your supporters on their terms can be challenging, but essential, and not just because you need their gifts. Effective fundraising assumes that you are working to assist donors realize their individual giving goals.

More and more non-profit organizations are attempting to identify "widgets" to manufacture in hopes that social enterprises might provide some relief.  Fee for services and sales can be helpful in rounding out a comprehensive funding strategy.

No one approach proves adequate.

It's complicated!

More on all of this later, I'm sure.

Thanks for hearing me out. . .it helps, as I noted in the beginning.

But now, I've really got to get back to our daily goal:  $32,592 and some change!

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