What Works in Fundraising for Innovative Organizations

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February 2015


 

 

Smarter Good conducted a two year beta phase, supporting the fundraising efforts of 20 nonprofit organizations led by social entrepreneurs. At the conclusion of the beta phase, we spent several months evaluating what works and doesn’t for entrepreneurial orgs. The following are some early findings on what DOES work:

 

Invited proposals: The most efficient/effective orgs are the ones pursuing ONLY invited proposals. This is commonly known in the nonprofit sector but it is hard for organizations to implement in practice. We see organizations meeting their goals by fighting the temptation to invest time in uninvited requests and especially awards with only one winner..

 

Multi-year cultivation plans: Organizations see steady growth in resources when they map out the funders they want/need in the next three years and start far in advance to cultivate those funders. The most strategic organizations will start in 2015 to get to know the funders it wants/needs in 2017.

 

Supporting EDs to do funder cultivation (instead of having Development Directors do it): We have seen the development staff turn-over at almost every client organization, sometimes twice in one year. Often the development staff are let go due to a combination of Development Director under-performance and Executive Director over-expectation. We believe that our sector will start to re-think the Development Director position – it doesn’t seem to be working for young, entrepreneurial orgs due to the challenges of recruiting and hiring development staff, taking on a fixed cost of a relatively expensive salary, and high turnover in a role geared toward relationship building, consistency, and chipping away at a goal every single day. In the early days of an organization, the Founder/ED is the person best suited to pitch funders on their new idea, and Development Directors are put in a tough position.

 

We have seen that it can be more effective to support EDs to do the front-facing work with funders to get to an invited request, with Smarter Good or an in-house staff member managing those cultivation steps, and the content and deadlines in the background. Smarter Good has also observed success when organizations provide support to program staff and Board members to do cultivation.

 

Peer-oriented relationships: We see organizations doing well that take a peer-oriented approach to funders. These Executive Directors/CEOs are communicating with current and prospective funders about industry issues, providing direct feedback, making connections for funders, and engaging them in the broader strategic work of their issue area/industry. This is in contrast to traditional models where the funder is seen as the expert and the organization is only in touch when it wants money.

 

Rigorous analysis at the prospect research stage, and fewer, but better quality prospects: Consistent with our observations about the strategy of pursuing only invited proposals, we see organizations doing well when they zero in on and prioritize very “high-fit” prospects. These orgs hone down their prospect list to about 10 priority funders and hunker down on cultivating them consistently over the year. These organizations are adamant about saying no to prospects that are a lower fit.


 

Jane Leu, Founder & CEO of Smarter Good, is an award winning and internationally recognized social entrepreneur.

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