Starting a nonprofit is no different than starting a for-profit business. There are thousands that spring up each year, and unfortunately, thousands more that go under within their first few years of existence. The reality is, even the best causes aren’t enough to insulate young nonprofits from inherent financial challenges. Ultimately, your nonprofit is just a different type of business, and as with any business, you need a solid plan.
Inevitably, and obviously, long-term success depends on a large and committed donor network. I’m a strong advocate of charities and nonprofits establishing legacy funds that encourage long-looking planned gifts. Typically, these are more effective and reliable for well-established nonprofits. As a start-up, you’ll likely need to work your way up to establishing something like a legacy fund.
So, as a newer nonprofit, how can you attract major donors and ensure sustainable funding well into the future? I have a few ideas.
Understand Your Donors
This is fundamental. Many donors are motivated by legacy and want to see the difference their money can make in the world. Others may want to repay a cause that has affected their lives in a significant way. Some view their philanthropy as a social networking outlet – they enjoy being part of something bigger and surrounding themselves with like-minded people.
In my experience, common among all donors is an investor’s mindset. If they are going to make substantial gifts, they will be motivated by an investor’s point-of-view, and want the relationship with your organization to feel like a partnership – something much deeper than a transactional relationship. Being able to recognize and speak to these motives with sincere messaging is a great start to making your organization more attractive to donors.
As a young nonprofit trying to establish yourself with donors, the intuitive impulse can be to shield your shortcomings and finances. The opposite is true. Donors want to know who you are and what their money might be used for. You need to be as transparent as possible. Don’t shy away from your financial situation, even if it seems dire. Own it as an opportunity for donors to make a major difference.
Develop a Detailed Business and Financial Plan
Have a one-year plan, three-year plan, and five-year plan ready to share with prospective donors. When we think of donors as investors, the necessity of these plans is obvious. Publishing an easily digestible annual report on your website, in the form of a white paper or something similar, is an easy way to communicate the implementation of these plans and to show donors where you’re headed and what exactly your organization needs.
Spotlight Your Success Stories
Success is an indicator of sustainability. Donors want to know that they aren’t piling money into a sinking ship. Many universities have such deep endowments because donors view them as almost permanently sustainable. Your most powerful tool for establishing a narrative of success and sustainability is storytelling. If your organization has changed a life, or saved a life, make that story a focal point. Donor stories are also important. Post a few of these to your website to help nudge prospective partners your way.
Relate the Money to the Mission
Don’t rely solely on facts and figures. You need to be able to communicate to donors what sets your organization apart and why they should partner with you. An effective strategy to help relate the money to the mission is calling on any of your current, major donors – I call them “Champions” – to talk about why they’ve chosen to work with you, and about what your organization and cause means to them. Think of it as gathering testimonials.
With this, you should be working to build a relationship with your potential donors. Having simple conversations about how things in their lives are going and what they hope to accomplish can be surprising, revealing, and endearing. It shows that you care about what your donor’s goals are, and it gives you an opportunity to explain how their goals can align with the goals of your nonprofit.
Be Able to Educate
Many donors who are considering making substantial gifts are already doing so with the guidance of an adviser, but not all. If you recognize a potential donor, you need to be prepared to educate them on the objective benefits of giving. Being able to have an informed conversation about their legacy, the tax benefits of charity, and the variety of giving options available to them (very few major gifts in American philanthropy are made in cash) can establish a level of trust and expertise on your behalf. And, as a further act of good faith, you should have a financial adviser you know and trust to whom you can refer them for more detailed direction.
So you’re having trouble determining if your nonprofit is attracting the right donors, and where your organization can improve? It’s not easy, but directing your efforts with more precision will make a huge difference. It’s about building real relationships with donors, moving past the money talk, and connecting your cause with their greater purpose.
*All content provided in this blog is supplied by Patrick Renn and is for informational purposes only. Barclaycard takes no position as to the views, and makes no representations as to the accuracy or completeness of any information contained in the blog or found by following any link within this blog.
Image credit: Shutterstock
Patrick Renn, founder and president of The Renn Wealth Management Group, has more than 35 years of experience in the financial services industry. His bestselling book, "Finding Your Money’s Greater Purpose: How to Make Your Legacy Count," discusses the important role that charitable estate planning plays in the lives of his clients. As a sought-out expert in his field, Renn has appeared on Good Day Atlanta, WCNN Atlanta, FOX, ABC and CNN as a financial educator and speaker.