Ashmore Consulting

How to Develop a Diversified Fundraising Plan

How to Develop a Diversified Fundraising Plan

Fundraising is a team process that involves, board, staff and volunteers. A fundraising plan should come from many different sources. I know of a group that relied on one major corporation for more than 50% of its total budget.  This was great during economic prosperity but when the market turned sour, the money all but disappeared. Instead of becoming dependent on a couple of sources, non-profits should work to expand the number of platforms and markets for revenue generation. In other words, don’t put all your eggs in one basket.

OK, you understand the concept but exactly how do you create a diversified fundraising plan?

First, let’s assess your current fundraising efforts. I developed a diversified fundraising assessment tool where you can quickly identify your gaps and dependencies.  Click here for a blank template you can use for your non-profit. Meanwhile, follow my quick and easy case study with this example of an assessment of ABC Health organization.

Diversified Fundraising Assessment Tool
ABC Health Total Annual Revenue = $ 100,000       

Revenue Category

Annual Rev

% of total rev

Target (2-20%)

Small Donors

$1,000

1%

10%

Major Donors

$2,000

2%

7%

Clients

$5,000

5%

5%

Board

$1,000

1%

3%

Spec. Events

$25,000

25%

20%

Foundations

$20,000

20%

20%

Corporations

$1,000

1%

5%

Relig/Civic Orgs.

$0

0%

5%

Government

$45,000

45%

20%

Earned Income

$0

0%

5%

Total

$100,000

100%

100%

 

First I got a copy of last year’s Profit and Loss Statement (also known as an Income and Expense Statement) for ABC Health. I looked at their total revenue for last year and it was $100,000. (I know this is rare but let’s use that hypothetical number to make calculations easier).

They had lumped donations for large and small donors into one category but since the numbers were so small, I was able to determine that they had received $1,000 from 20 small donors and 4 gifts from major donors. How you define small and major donor is based on your discretion. For some organizations, a major gift is anything over $500. For others it may be anything over $1,000. You can define what makes sense for your group but however you break it down, know that your fundraising strategies will slightly differ for smaller and major donors.  We will discuss that in more detail in another blog.

They had broken out the other line items on the P&L so they were easy to retrieve. As you can see in the example, ABC Health depends on just two revenue sources for 70% of its revenue: the federal government and their annual special event, a 5K Run. Way too much! The other categories are abysmally low except for foundations and clients, which are right where they should be. You can reasonably put foundations at 20% if you have good relationships with foundations whose priorities match your mission and outcomes. You can set clients as 5% if you are serving a poor population. If you are serving a more affluent clientele, that percentage would be higher for clients or members.

So what is their prescription for a diversified fundraising plan?

ABC Health needs to increase their funding in some categories and reduce it in areas that are more than 20%. I know it is hard to reduce an amount but remember, I am saying reduce the percentage. If you increase the amounts for other categories, you are decreasing the percentages for the big line items. In other words, reducing dependencies on a couple of funders. With federal budget cuts and the current sequestration, federal grants are sure to decline in future years. Where would ABC Health be if they lost their biggest revenue source with no plans for diversification in other areas?

By the same token, ABC Health has done little to cultivate donations from individuals. Do you think the participants in the 5K Run could become individual donors? You bet! But a strategy to cultivate and solicit those individuals is in order.

We came up with some percentages between 2-20% and established them as reasonable goals for each revenue category. This is what ABC Health is striving for this year.

Over the next few weeks, I will discuss how you as a nonprofit can increase funding in each of the revenue categories. But for now, do an assessment of your diversified fundraising strategy using the assessment tool. We’ll talk more.

 

Leave a Reply



Helping non-profits and foundations succeed