How Do I Fund Our Mission?
Ideally, a funding model fuels an organization’s bid to deliver results and provides a viable path towards sustainable future growth. But that ideal is more often than not elusive.
Funding therefore becomes a constant topic of conversation among nonprofit leaders: How much do we need? Where can we find it? Why isn’t there more of it? The following articles are essential reading for nonprofit leaders seeking to develop a funding model that works well for their organization. Please explore our "Deeper Dives" section for more detail on specific topics within the funding area.
Getting Started:
(Stanford Social Innovation Review; William Foster, Peter Kim, Barbara Christiansen)
When nonprofits and funding sources are well matched, money can flow to the areas where it will do the greatest good. With an eye towards helping more nonprofits and funders align, Bridgespan research identified the funding models most commonly used by the largest nonprofits in the United States. This Stanford Social Innovation Review article describes the models and offers commentary on how nonprofit leaders can use them to hone their funding strategies.
(Stanford Social Innovation Review; Ann Goggins Gregory, Don Howard)
Organizations with robust infrastructures, from information technology systems to skills training, succeed more often than those without. Yet nonprofits routinely under-invest in such beneficial overhead, and donors often decline to fund it. In this Stanford Social Innovation Review article, the authors discuss this persistent "starvation cycle," and suggest ways to stop it.
(Chronicle of Philanthropy; William Foster, Gail Perreault)
Why doesn’t fundraising strategy get as much deliberate attention and planning as program strategy? In this Chronicle of Philanthropy op-ed, the authors share some reasons and offer advice to help nonprofits become more strategic about seeking support.
Deeper Dives:
(Stanford Social Innovation Review; William Foster)
Foundations and other nonprofit donors generally do not have sophisticated techniques for identifying the most promising nonprofits—the organizations most deserving of large one-time investments ("growth capital") that allow for large-scale growth. As a result, the nonprofit sector’s greatest gems often languish well below their full potential. This article offers a due diligence process funders can use to identify strong candidates for growth capital. Nonprofits likewise can use this process to figure out whether and how they can attract growth capital.
(Stanford Social Innovation Review; William Foster and Gail Perrault)
Between 1970 and 2003, 144 nonprofits went from founding to at least $50 million or more in annual revenue. How did these organizations achieve such growth? This article explains what these nonprofits have in common, what other nonprofits can learn from their experiences, and why finding a funding source that is a natural match to an organization’s mission is critically important.
(Nonprofit Quarterly; Clara Miller)
Miller's true/false quiz reveals compelling comparisons between the worlds of nonprofit and for-profit finance; this article offers highly relevant lessons for nonprofits about finance, funding and sustainability.
(Nonprofit Finance Fund; George M. Overholser)
This article describes the distinct differences between building the enterprise and buying from the enterprise. The author also discusses how the nonprofit accounting system can be fixed to better realize and benefit from this difference.
(Roberts Enterprise Development Fund; Jed Emerson)
In this chapter, the author discusses the shifts that have taken place in the nonprofit sector and explains the various forms and strategies for funding nonprofits at different developmental stages.
(Harvard Business Review; William Foster, Jeffrey Bradach)
Bridgespan research shows that earned income accounts for only a small share of funding in most nonprofit domains. Few of the ventures that have been launched actually make money. And the stakes are high: Commercial ventures can distract nonprofits’ managers from their core social missions and, in some cases, even subvert those missions. (This article appeared in the February 2005 edition of the Harvard Business Review. Visit the HBR web site for more information or to purchase the article.)
(Bridgespan Group; Alex Cortez, William Foster, Katie Smith Milway)
Nonprofit mergers often come about through default—due to financial distress or leadership vacuums. But the potential for M&A to create real value in the nonprofit sector exists, particularly if more philanthropists take on the mantle of matchmaker and help nonprofits explore and evaluate M&A opportunities.
(Bridgespan Group; Barry Newstead, Pat Wu)
Nonprofit organizations across the country serve the needs of rural communities in critically important ways. Yet the conditions under which they operate are uniquely challenging. To help inspire discussion and additional research on the management of rural nonprofits, the Bridgespan Group undertook the research reported in this paper—research that shines the spotlight on one particularly acute challenge, the resource gap.
(Bridgespan Group; Mandy Taft-Pearman, William Foster)
This case study describes how a Rochester, N.Y.-based nonprofit discovered opportunities for funding and partnerships.