Do You Need a Funding Plan?
Introduction to the Six Steps
Step 1: Establish Priorities
Step 2: Assess Capacity
Step 3: Set Fundraising Goals
Step 4: Identify Funding Sources
Step 5: Evaluate & Select Funding Sources
- Fundraising Environment
- Estimated Returns
- Key Evaluation Questions
Sample Finance Plans
List of Case Studies
References & Additional Resources
Step 5 (continued). Estimated Returns
When choosing the best funding strategies for your group, it is important to know what kind of returns you can expect from a particular funding strategy. One of the best ways to figure out costs associated with different funding options is to ask other groups in your area. Here are some factors that can affect your organization's fundraising costs and returns:
- Age of your organization. New organizations can expect to see fewer returns from their funding sources than established organizations. For example, success with particular grants in previous years may determine success with those grants in future years.
- Competition for funds. If there are similar organizations in your area, you may see a decreased return on investments.
- Source of funds. Small gifts from individual donors will mean higher fundraising costs, at least in the short term. In contrast, grants, major gifts, and donations from corporations will mean lower costs. (However, individual donations are more sustainable, as we will see on the next page!)
- Different methods. Different methods have different returns. Below is an estimation
of returns from a few funding sources:
Source of Funds Expected Costs Membership $0.20 to $0.30 per $1.00 raised Special Events $0.50 to $1.00 per $1.00 raised Corporations/Foundations $0.20 per $1.00 raised Direct Mail (acquisition) $1.25 to$1.50 per $1.00 raised Direct Mail (renewal) $0.20 to $0.25 per $1.00 raised
- Non-monetary returns. While some of these strategies may be higher in cost than others, they often have important non-monetary benefits, such as recruiting new members, maintaining current membership, media exposure, and heightened awareness of your watershed.
Fundraising costs has become a hot topic in the nonprofit sector. Not only are nonprofits facing increased scrutiny on their operating and fundraising costs, but they are also facing increased competition from other groups in their area. As a result, nonprofits often feel the need to show low fundraising costs and assure donors that their money is going towards programming and projects. Still, organizations must be honest about their fundraising costs to develop trust among their donors.
Citation: See Resources, Works Cited #28