The Covid-19 pandemic has profoundly changed just about every aspect of our life as we know it (this sentence made me immediately think of the famous R.E.M. song used in this ancient Greenpeace video from 1993, which you can listen while reading this article :). This also includes having a significant impact on non-profit sector and its financing. Fundraising – in particular individual giving – has become a common challenge.
Many non-profit organisations have lost ground under their feet during the Covid-19 crisis period and some of them will never fully recover from it – similar as we witnessed after The Great Recession period in late 2000’s. But others have ended up exceeding their fundraising goals and coming out of the situation as winners. So what has made this possible? What is the secret behind this difference?
Key successful strategies used by the winners, which will take you to the next level
Fundraising strategy and plan
Regardless of how deeply has your organisation been affected by the Covid-19 pandemic, rethink and update your fundraising strategy and plan for the upcoming years. Or if you don’t have one yet, than start to work on it as soon as possible. The organisations which have fundraising strategy and plan in place typically outperform the ones without it. They represent your contingency plan for moments, when you will not be able to progress in fundraising as you originally planned.
Besides all the negatives, the Covid-19 pandemic has also become an exciting trigger for many NGOs to innovate and to seek for alternative fundraising solutions for long-term change. So do not stay behind and pimp your fundraising strategy and plan with new ideas, tools and approaches, which have proven to be effective!
While being absorbed by working on it, do not forget about the others in your ecosystem and include them to the process as well. It should be especially your board members, funders, volunteers, individual donors and other key stakeholders. Their engagement and unique experience will help you to adjust your fundraising focus, priorities and goals effectively.
Sustainable and resilient organisational finances
Building sustainable and resilient finances of organisation represent your safety net for uncertain times and a key to your future prosperity. But what does this mean in practice?
For a starter, as the funding can be unpredictable and inconsistent from various reasons, diversification of your income sources reduces the risk of being dependant on one/few income sources and contributes to your financial stability. Check out your income sources structure according to income type (foundations, individual donors, corporate donors etc.) and calculate the % of income from each type. Also calculate the % of income from a single donor within each income type if possible. One of the golden rules says that income from one single donor should not exceed 10% of your total yearly income. In order to diversify your income sources, you should constantly be identifying and reaching out to new funders and consider introducing new income streams. The new income steams are something what has not been present in your fundraising strategic plan before – for example fundraising from major donors, legacy giving or cryptocurrencies.
The critical component of organisational financial health are also the capital reserves. There are two basic types of capital reserves – operating reserve and change capital. Many NGOs enterted the crisis situation created by the outburst of Covid-19 pandemic without large or even no reserve funds. The pandemic has made their situation even more grim as (some) individual and corporate donors have pulled back on donating, offline fundraising events have been cancelled and even some of foundation donors have suffered losses.
What is the difference between those two basic types? The operating reserves are your financial safety net for a case of unexpected events like Covid-19 pandemic, which tend to cause sudden income losses and create major unbudgeted expenses. The change capital are the extra finances, which help to drive (not only) fundraising innovation and creativity in your organisation. As both types of capital reserves have a form of unrestricted funds, it is usually the management of your organisation which decides on how to use them. The recommended practice is to have a target of building up capital reserves equal to at least 3 months of average operating costs of your organisation. But the more the merrier!
Do not feel desperate if you are reading these lines and your capital reserves are very low or even non-existing. It is never too late to start to build them step by step from your unrestriced income such as donations from individual donors. You can also explore a possibility to build up your capital reserves from core funding grants as some foundation donors allow and encourage this practice.
Stay tuned for Fundraising Strategies for a Post/Covid-19 World (Part 2)