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Alternate Sources of Funding: full opening message

Full opening message of FundClass Topic #08, December 1997

Opening Message by Bill Scott for FundClass Topic #8

Introduction:

Up until now FundClass has focused on deepening the knowledge base of its subscribers. In this session, we will seek to expand or broaden the fund raising possibilities available to NPOs by looking outside "traditional" methods and identifying plausible alternatives. Members of the FundClass list will be asked to consider a more abstract topic - one that looks to *broaden* the possibilities related to fund raising activities as opposed to *deepening* an existing understanding of the issues.

We believe this is uncharted territory and, as a result, the topic may become vague, abstract and esoteric from time to time. We ask for your indulgence, support and especially your assistance in working through these difficult spots. There really are no experts for this topic. No-one that we are aware of has done research on this topic which would provide us with the comfort of understanding the correct way of handling it.

Premise:

Nonprofit organizations rarely consider opportunities that fall outside "traditional" fund raising methods. As populations steadily increase, the need for services offered by NPOs also increases. As governments reduce their commitment to the charitable sector, the need for funding grows. Unfortunately, the demand for new funding sources outstrips the supply. As a result, competition for scarce resources is heating up. If NPOs are to succeed in maintaining their organizations in the long term, we will need to develop alternative sources of funds.

To date, FundClass discussions have assisted members of this list in very concrete ways - how to develop a better annual fund, how to start a direct mail campaign, how to approach corporate sponsors. In short, so far topics have highlighted the existing, "traditional" methods of funds. In much the same way that corporate sponsorships, direct mail campaigns and black-tie auctions were all new ideas at one time, so too will the ideas generated in the next couple of weeks. Before the first corporation was approached, it was a novel means of establishing a reliable funding source. Before the first direct mail campaign was designed, it was a novel means of establishing a reliable funding source. Before the first black-tie auction was held...

The purpose here is to increase the number of choices available to nonprofit organizations so that we can choose a method or methods that most closely matches their needs and circumstances. To do that, we must explore ideas that fall outside the traditional fund raising realm.

Initial Message:

Nonprofit organizations must examine what we believe to be true with respect to fund raising. Specifically, are the "traditional" sources of funding -- grants, lotteries, wealthy individuals, corporate sponsors, fill-in-the-blank-a-thons, et cetera -- viable in the long term? I would argue the answer is "yes, but no." Yes they are viable because there are still funds being raised by nonprofit organizations using these methods. But also No because these funds are shrinking. due to a number of reasons including:

1. the increasing number numbers of groups seeking them,
2. a reduction in funds being made available for charitable work and
3. whatever other macroeconomic reasons you can think of.

Therefore, organizations need to become less dependent on them. In short, I believe that we all need to diversify our funding base. To continue to depend on these sources is akin to depending on a 286 computer to meet your needs in 1997 -- there are times when it will adequately meet your needs and many more times when it clearly will not.

If you accept this premise, then in my view, organizations must look at alternative funding means -- in particular, ways that are less "traditional" and ways that provide the donor with greater value in return for their contribution. NPOs then, need to discover something about what these strategies might be.

Issues to be Raised:

1. What are members of FundClass doing to raise funds in "nontraditional" ways?
2. How effective have they been?
3. What made them effective?
4. What were the problem areas?
5. What solutions were found?
6. If you could do it all over, what would you change?

One NPO's Experience

The Richmond Youth Service Agency is a medium size nonprofit organization that serves children, youth and families in Richmond, BC -- just outside Vancouver. I am its executive director.

For the past year, we have operated our own seminar presentation company. Guest speakers are arranged, rooms are rented at a local hotel (which gives us a small break on price), registrations are taken and clients are served the day of the presentation. Currently, we only use our existing counsellors to staff the operations of the business on a volunteer basis. In exchange for registering clients and tending to both their needs and those of the presenter, our staff are able to attend the workshop free and receive the training.

The agency also operates a fee-for-service program called Richmond Resume and Career Planning Services. Our staff provide resume writing, career testing, career counselling and job search counselling to men and women able to pay for the services. Our staff also present workshops on a wide range of employment and human relations topics to the local colleges, business colleges and businesses.

We are looking at ways to partner with other nonprofit organizations in the development of other fund raising options. These include both involvement in for-profit ventures and retooling donor strategies. For example, a number of community nonprofit organizations with child, youth and family serving missions have begun to discuss the feasibility of joint fund raising with all funds going into a central pot and being administered by them jointly.

Finally, the agency is currently researching the feasibility of operating a retail business. We are participating in a pilot project (along with 9 other NPOs) where consultants are hired by a consortium of three philanthropic organizations (including the United Way) to teach nonprofit organizations in the development of business plans and related advice.

Funds generated from all of these ventures are or will be allocated to the ongoing activities of the agency.

I look forward to hearing from each and every one of you -- that means 300+ separate, individual posts. This topic will only be useful if people jump in and take some risks. Remember, this is basically brainstorming and the number one rule of brainstorming is don't hold back and don't prejudge.

Regards,

William Scott, Executive Director

Richmond Youth Service Agency, Richmond, BC, Canada

Email: This email address is being protected from spambots. You need JavaScript enabled to view it.

This opening message was originally posted by Bill Scott on November 13, 1997