Fundraising 101

Black Fox Global’s Communications Department Lead recently conducted a fundraising overview training session for the dedicated and enthusiastic team at Catalyst 2030. Acknowledging that it can be challenging to find succinct and accessible ‘Fundraising 101’ content, and driven by our commitment to being open-source, we adapted the training session into this brief resource. 

We hope you find this resource helpful if you’re just starting out in fundraising, want to demystify the jargon, and get your feet under you more quickly so you can achieve the win-win funding your mission deserves.

What is fundraising?

Fundraising in a nonprofit* setting means acquiring ‘voluntary income’ for your organization. This is money given freely – so a grant, donation, or event sponsorship, for example. Some nonprofit organizations also rely on raising income from other sources to sustain their operations in the form of exchanging goods or services – this could be from government contracts, service fees, or retail income. 

Nonprofits can also receive ‘gifts in kind.’ These are gifts in the form of goods and services, such as IT equipment.  

*For the sake of consistency, we use the term ‘nonprofit’ throughout this article; our intent is that to the best that it can, this represents all forms of nonprofit, NGO, iNGO, charitable organization, not-for-profit, social impact organization, etc. that may be used in various contexts and legal structures. Specific legal implications, systems, and compliance will vary based on your exact location and registered business structure.

How can we use voluntary income?

When money is given freely, there’s no exchange of services or goods, so that means there could be some strings attached. ‘Restricted funding’ refers to when you request grant funding for a specific project, and are obligated to then spend it on that project. There’s usually an application or proposal and a budget submitted, as well as progress reporting involved throughout the duration of the grant. Unrestricted funding means you can use that money however your nonprofit sees fit to further your mission. Many individual contributions – such as public donations – are unrestricted. Having a large pool of individual donors can therefore be quite desirable for many nonprofit organizations, since there will be less administration and reporting involved.

What are the different types of fundraising revenue streams?

There isn’t one exhaustive list of the exact ways nonprofits receive money, but we have broken down core revenue streams into three areas. Other revenue streams may include program-related investments (PRI), earned revenue, impact investing, and more. For simplicity, we are focusing on three primary streams that are relevant to most nonprofits.

Government Funding

Sometimes called ‘statutory funding’ or, depending on the exact source and recipient, ‘bilateral’ or ‘multilateral’ funding, these funds come from the government and typically support aid and development organizations. They can be administered via an intermediary, or directly from a government office, such as the U.S. Department of State.

Individual giving or public fundraising

This is any type of funding given by the general public, such as an individual donating $50 to a relief appeal, or a family member sponsoring a marathon with a $100 donation. There’s many ways nonprofits can receive money from the public: through email and social media marketing, crowdfunders, events, or regular giving programs. 

Managing a significant database of individual funders and investing in marketing, however, can require a lot of capacity, resources, and even brand recognition. This type of fundraising can take time to build up – and is not always accessible or fruitful for organizations needing funding to sustain their long-term operations. That’s where philanthropy comes in.

Philanthropy

Last but not least, we have philanthropic funding. This can be administered through trusts and foundations, or high net worth individuals looking to invest in organizations whose missions align with their philanthropic goals. Whether it’s with an individual or a foundation, this type of fundraising requires relationship building and strong synergy between objectives and values. 

There are many types of foundations: private foundations, such as family foundations or longstanding trusts, corporate foundations, or ‘collaborative funds,’ to name a few. As mentioned above, funds from philanthropic foundations are usually given in the form of a grant, which likely will have stringent requirements on reporting, prerequisites, and what the money is spent on. Between prospecting, persistent outreach, pitch meetings, applications, negotiating, grant agreements, and adhering to reporting requirements – depending on the foundation, there can be a lot of administration involved in receiving grants. However, there is a growing movement away from funding that is short term and restricted, and towards long-term, trust based philanthropy.

How do I engage foundations?

Some grantmakers have ‘open calls’ where any aligned organization that meets the requirements can apply. Some foundations are invitation only, or seek to build a rapport with you over time before inviting you to submit a proposal. 

Many proposals employ a multi-step process: starting with a Letter of Intent (LOI), then a full application before moving onto the final stages of due diligence, contracting, and granting. You can read more about BFG’s advancement process here. 

What should I look out for when seeking a good fit funder? 

Before investing time in outreach and proposals, it’s vital to engage in prospect research to feel confident that the funder’s goals align closely with yours. Things you can look for when researching a funder include:

• Themes, programmatic priorities & Sustainable Development Goal (SDG) alignment
• Geographics and regions: do they give grants in the regions you operate? 
• Grant sizes and amounts: does it make sense for your budget? Could you absorb the funds if you were successful? 
• Application process and reporting requirements: do you have the capacity to adhere to ongoing reporting and due diligence? 

Lastly, you also want to ensure your messaging is ‘funder-centric’. Ask yourself:

• Have you done your homework and due diligence to tie the funder’s mission/vision to your work?
• Have you thought about how you effectively communicate your impact? It is critical to communicate in a way that will land with the funder. Outreach needs to clearly demonstrate that you have in fact done your homework, and there is clear alignment between their mission and your work. 
• How are you monitoring and evaluating your work? 
• Can you summarize your identity, work, and approach in a coherent engagement pitch?
  These are some of the basic building blocks to be mindful of when embarking on developing your own successful organizational fundraising strategy.
  
  Ready for the next level of fundraising success? Check out some of our other Open Source materials below, or visit Black Fox Global’s Solutions Page to learn more about our paid services. 
  Uncovering and Engaging Deeply Aligned Funders
  The Art of Engaging Your Networks | Fundraising Self-Identification Exercise 
  Connecting Deeply With Funders: Crafting Your Why
  Leading the Donor Dance
  Roadmap to Launching a Powerful & Effective Major Gifts Program
  
  Have questions? Please get in touch and we’d be happy to help.