Nonprofit Financial Streams and Grants

Many organizations go into grant writing with the idea that grants should be one of their first funding sources or that grants should be one of their main financial streams. They have the mistaken impression that if they can just write one or two really good grants, their organization will be set for years. Some think that if they can just secure “that one grant,” then their organization won’t struggle ever again for funding.

What these organizations fail to understand is that grants are a great financial stream for nonprofits, but that grants should only be sought once the organization has other stable financial streams. Most funders will not fund your organization to just keep doing what you have been doing. Additionally, most funders will not fund your organization if they fail to see other, successful financial streams that will keep your organization afloat once the grant money runs out.

So, what exactly are grants for, if they aren’t to sustain your organization’s general operations?

What are grants for if they aren’t to get your organization up and running in the first place?

What are grants for if they aren’t to be your organization’s main financial stream?

Grants are meant to be just one element of your organization’s larger funding plan. Your plan ought to include multiple sources of income and incorporate varying income methods.

Most successful, healthy organizations have diverse funding and financial streams so they don’t become reliant on just one source, because what if that source dries up?

For instance, let’s say that your organization only relied on one $500,000 grant to fund your entire operational budget each year. You have a great relationship with this funder and so you have become extremely reliant on this one funding source. Everything works out great for 4, maybe 5 years, but then something happens to the funder. Perhaps the original funder hires someone else to hand out the grants, or maybe the funder and foundation decide to start funding different causes. Before they were only funding HIV research (what your organization does), but now they have decided to fund some HIV prevention projects (something that your organization does not do). For whatever reason, when you apply for the grant next year, your organization is not awarded the funds. Now what? Your ONLY source of income is gone, and your organization is no longer able to pay it’s staff, conduct the research, or do anything else.

This same kind of issue can arise if your organization relies too heavily on any one financial stream, and grant writers, or funders, do not want to be that one financial stream for your organization. Therefore, it is important to have multiple financial streams in place before your organization begins seeking grants.

Here is a list of financial streams for your organization to consider before seeking for grants:

Repeat, Individual Donors

First of all, Seek funding from donors who are close to your organization, and who will give repeat donations over time.

Who are these people?

These are the people who are on your Board of Directors.

These are people who are deeply invested in your organization and in the mission of your organization.

Additionally, these are people like the little lady in West Virginia who lost a grandchild to lung cancer (your organization’s cause), and has been heavily dedicated to the cause ever since.

Fee for Services

Secondly, if your organization provides any services, charge a fee for service.

Do you provide after school activities for youth? Charge a little for the youth to participate.

Do you care for abandoned animals until you can find people to adopt them? Charge an adoption fee.

Membership Fees

Is your organization a club or some sort of exclusive group? Then consider charging a membership fee.

My husband recently joined a nonprofit organization for Gliding and he is charged a membership fee each month to be able to use the glider planes.

Fundraising Events

Are there any annual fundraising events that your organization can put on?

Here are some options:

  • An annual gala
  • A 5K, 10K, or half-marathon
  • A school dance
  • A golf tournament
  • A Christmas party

Honestly, that is an extremely pathetic list for the amount of fundraising event options there are out there. Get creative and come up with an event that matches your organization and can be hosted at least once a year.

Conclusion

Overall, grants are not intended to be your organization’s first financial stream. Nor are they meant to be one of your organization’s only financial streams. Therefore, it is important that your organization sets up various financial streams before you start seeking grants.

 

Related Articles:

Grant Writing Myths

Is Our Organization Ready for Grant Writing?

Leave a Comment

Your email address will not be published. Required fields are marked *