Archived Seminar: Build Your Funding Strategy/Plan
Nick Fellers | November 12, 2008
We had a great seminar today – lots of participation and discussion around a relationship-based funding model and how to build your funding strategy and funding plan. Some teleseminars are live only (not archived). Others are archived. We’re going to archive this for three days only then move it over to the Online Learning Center ($).
In this seminar we discuss:
- A new look at “conventional” nonprofit funding silos (annual fund, special events, direct mail, grants, major gifts, endowment, planned giving, campaigns)
- A 100 Day funding plan to generate $100,000
- The triple ask (operations, projects & endowment)
- How to build a funding plan
- Top-down focus (not bottom-up)
- The master prospect list
- Simplicity, focus and return-on-energy
- Edit: “Year-end Funding Strategy”
Some of the questions that came in following the seminar are posted below. Add your questions to the comments.
Q. We are just getting starting and we don’t have a real funding plan.
[Our Org] has a yearly budget of $400,00.00 per year. $380,000.00 for running our school and training programs for the orphaned children in Rwanda and20,000.00 to pay our director and rent here in NY. We have never been able to raise the full amount of the money we need.
We have the opportunity to purchase land and build a boarding school for at risk girls, but no plan to how to do the fundraising.
We spend all our efforts on events where our Director (who is so compelling) speaks and we maybe raise $10,000.00 at a time. Now I understand how this is the wrong focus.
I do need to work on a real plan to get us solid. What you have said to this point has been helpful. Thank you
- BK
A. BK-
Thanks for your note!
Need to be focusing on following up with people at those events (to maximize the relationship). Talk to them about your programs — you need money for
Teachers (or curriculum)
Campus (or places where you do the teacher)
Students (a cost associated with each student).
The funding priorities might break out like this:
Teachers: $175 K (training, finding, supporting, paying)
Campus: $50K (we use other campuses but still need a central HQ – I’m making this up)
Students: $175K (we help 350 kids at an average cost of $500/kid)
Your plan should be around this — either get people to fund blocks of kids. Eg. “Nick, can you underwrite 20 kids?” OR Ask me to take make a $50K lead gift toward the vision for each of the next three years.
NJF
Q. I missed what you mean by flip to fill the funnel … can you repeat?
- JW
A – JW, if and only if someone is actually maximizing relationships then you can think of the model as a funnel. Without the focus on the top then it’s just a pool (not a funnel). You can use your events as predisposition events — with the idea that you will follow-up with attendees one-on-one following the event.
NJF
Q. How do I “think big” and shoot for a $1M budget, but also prove that we’re a lean organization?
Have a call with a legendary VC in a few hours!
- MDP, Social Ventures
A. MDP. As a VC he will understand Think Big, Build Simple. There is a reality… you don’t NEED $1M TODAY but you do need $1Million. So you can talk to [name] about growing with the vision – it could be a $200,000 ask in which he does $25K this year, $75K the next and then $100K. This is all a function of how/where you can let your plan go.
The other part of the answer is accounting for WHERE The money will go – your three circles. If your plan really requires $1M then it really requires $1M. You could be a $100M org and still be lean. So… what are you doing with the $1M?
Does that help?
NJF
Q. Hi Nick,
In planning your top tier, how do you determine when to use 5 angels at $100k each or top donor of $200k plus next 2or 3 at $100k, etc.
Then the same thing for the second (or middle) tier.
Thanks.
Best Regards,
- CP
A. CP
Thanks for the question.
I think it starts with what you can get your best prospect to do. The plan is DYNAMIC (I’m making a note to share this next time). Dynamic means that you can adjust your plan. If your top prospect agrees to $50K then you know you need to widen the base.
The important thing is that you do the math. The math will reveal when the plan becomes ‘not viable’. That is, if you find that you let everyone down a few levels and now need 700 prospects at $1000… well, that’s not viable.
I usually start out with a very aggressive funding plan and adjust if and as needed. I am reluctant to let off the aggressive plan though because in many cases, if you start adjusting your levels the funding just can’t be made up.
NJF
Q. Nick,
You distinguish the difference between sales & marketing. I understand this and wonder as a 1 person department who needs to raise awareness and funds, how do you measure the no-monetary yield such as greater awareness, buzz, etc…and include these needs in our plans
Do you have suggestions of best ways to identify qualified prospects?
Thanks,
D.
A. D – I think the key lies in understanding the distinction.
As a one-person development department my plan would focus on 20-30 prospects. We cannot fund our vision without those prospects. I don’t know the nature of your org (re: awareness) but re: funding, it’s only important that those 20 or 30 have a greater awareness. Heck, if we can get the funding on board we’ll hire someone to do marketing 
NJF
Nick,
Thank you so much, I felt this was an excellent, excellent seminar……….. As a one-woman development department, I’ve got to tell you, that I was originally shaking in my shoes thinking of our upcoming, $3.5 M endowment/capital campaign………. And now, after your seminar, realize we probably need to make that a $12.5 M campaign – I strangely feel less anxiety than I did about $3.5 M
- JT
Q. JT – We’ll definitely get that for you when it becomes available.
Funny. It’s easier to think big than think small, isn’t it?
I just helped a retirement community in San Diego do this. The catalyst for the relationships was that they needed $5Million for a new center. We elevated the vision (did not change or arbitrarily add funding priorities). We took into account the entire picture and through that the org was able to secure a $5M gift to underwrite the project – as a piece of the vision. They never could’ve done this had they been about a $5M campaign.
NJF
2 Comments So Far
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Nick Fellers - November 13th, 2008 12:00 pm
@C., Thx. for your note your note. I wrote a (direct) piece for those that don’t have a budget. ‘Advancing the vision’ is not a line item in any budget — doesn’t exist. We also have an ‘online’ version of the bootcamp that’s now available for $195 – we designed this for organizations that are young/start-up and that could not afford to make it to tcamp.
Outside of that I would say:
- Continue to jump on seminars. We believe these should provide enough info to help you jump start funding and even underwrite boot camp. If they aren’t, boot camp will have a limited value to your organization.
- Read ANY Book on sales and thinking (big). This includes
– Think and Grow Rich
– Anything by Zig Ziglar, Brian Tracy or Tommy Hopkins
– The Magic of Thinking Big
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Nick Fellers - November 15th, 2008 12:01 pm
@BT, Thanks for your question… It may well be that I wasn’t clear on the conference call. A few points to make…
1) Building endowment from cash is a tough sell — it’s bad math. You want me to give up my money (that I might earn 10% – 20% on) so that you can put it in the bank and earn 5%. No thanks. Instead… build your endowment through planned giving. I’m alive now. I want to see my money DO SOMETHING if I’m going to give it to your org. I’ll fund programs now and endowment later (when I’m six feet under).
2) The reason orgs want an endowment is for the ANNUITY. So, get me to make a $1M planned gift (that could go to the endowment). Coupled with that, ask me to give/invest $50K annually to the org. The rationale for this ask: $50K is 5% of $1M. The org gets the annuity started today while I get to hang on to the nut in case I need it. Then, you really don’t care when I die. It’s $50K a year either way.
3) Works the other way. If I’m giving $20K / year you could ask me to ‘protect’ that annual investment. Again, assuming an endowment gives your org an average return (to spend) of 5% then doing the math multiply the $20K times 20 = $400K. A planned gift – that would go to the endowment – at $400K would kick off about $20K per year. This insures that we receive that commitment to fund the impact in perpetuity.
4) On a separate note. Many orgs cannot afford to build an endowment right now. The opportunity cost of not saving lives now is not justified by creating this bank account. This is a discussion about the cost of money. Can you afford to NOT be saving XX lives, changing XX lives this year by putting $50K into an endowment? $50K into an endowment right now would give you about $2500 per year. Is that really going to have an impact? Food for thought
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