Have you ever heard the phrase: “Never put all your eggs in one basket.”? It’s one of those sayings that’s repeated often, but people don’t always stop to think about exactly what it means.
In a nutshell, if someone tells you this, they’re cautioning you from solely depending on one resource or area for the desired outcome. Because if things go sour, you likely won’t have a plan B lined up.
And as a nonprofit organization, that’s exactly what it means to diversify your funding. Although we hope our donors will continue to fund our organizations for years to come, you’ve got to be realistic. Donations are strictly voluntary; at any given moment, donors can decide they no longer wish to fund your organization.
Not sure how to diversify funding for your nonprofit? We’ve got 4 tips you’ll want to keep in your back pocket:
Use a CRM tool – or Customer Relationship Management
CRM tools help you stay connected and organized when it comes to your donors. They help you automate communications, solicit feedback, and store data so you can analyze as needed. CRM tools also help you communicate with potential donors. They can help you add new leads for potential donors easily and quickly. Platforms like Dubsado, Monday, and Capsule are all great CRM examples.
Analyze current funding sources and streams
It’s important that you regularly take the time to analyze your current funding. This way, you know exactly where the money is coming from. When you know this information, you can start to identify any patterns that may exist. Are there any similarities in demographics? Particular companies/industries? Individuals who have things in common (for example, location, age, gender, etc.). This is powerful data to understand because it can uncover where there may be gaps or potential to market to certain audiences.
Understand problem areas (and create a plan)
We hinted at this in the last tip. Once you begin analyzing your funding sources, you may start to notice there’s a group severely underrepresented. For example, if your nonprofit organization aims to combat homelessness, is any of your funding coming from companies with similar values? If not, you need to ask yourself why that is. Do these companies know your organization exists? Are you doing the work to reach out to them? Once you’ve identified problem areas like this, you can start to create a plan of attack to rectify the issue.
Analyze potential funding sources and streams
This tip continues to build on the last two. You need to understand where your funding should be coming from. Is your organization receiving a lot of individual donations? Are they small or large? Or is your organization mainly receiving donations from big companies? Getting down to the “nitty gritty” with data and percentages can really help you uncover NEW funding sources. This is especially important to know if/when current donors decide they no longer wish to donate – you need to have others lined up so the well doesn’t run dry, so to speak.
In the nonprofit world, it is extremely important to have a variety of donors. A diverse group of donors – different industries, backgrounds, and fields. In case one falls through, you’ve got plenty of others to fall back on and can keep your organization afloat!