Achieving financial sustainability as a nonprofit is no easy task. With financial obstacles like high interest rates, inflation, and unpredictable donors, finding sustainability can feel like an uphill battle. That’s why it’s imperative that nonprofits diversify their income sources. Find out how your nonprofit can work toward strategic sustainability.
Why Should Your Nonprofit Embrace Strategic Sustainability?
The Need for Sustainability
According to the Fundraising Effectiveness Project (FEP) Q3 2023 report, market trends in 2023 pointed to a decrease in donor participation and money raised by donations. This growing trend across the nonprofit market began with the economic uncertainty of 2020 and has continued to show nonprofits the importance of establishing alternate options for revenue and longevity. While more stable in past years, nonprofits have learned the hard way that donor priorities can shift overnight, making it difficult to rely on regular donations, grants, and fundraising appeals as their main revenue streams.
In the current economic climate, nonprofits are experiencing an increased need for year-round fundraising and long-term sustainability. As Peter Sanchez, CEO for The Atrisco Companies, points out on Forbes.com, “By embracing strategies from the for-profit sector, nonprofits can navigate financial unpredictability and ultimately increase their social impact.”
Trends in the Right Direction
GiveSmart data from 2023 shows a positive trend toward sustainability thanks to the recent shift in year-round fundraising efforts. Instead of Q2 and Q4 dominating annual fundraising like in previous years (each with 30%+ of funds raised), the data shows a better spread of year-round fundraising in all quarters:
- 22% raised Q1
- 28% raised Q2
- 21% raised Q3
- 29% raised Q4
By focusing on year-round engagement efforts with diversified approaches, nonprofits can encourage donors and stay connected, resulting in more consistent, sustainable giving. The benefits of this approach are attainable if your organization is willing to put in the effort.
How Can Your Nonprofit Plan for Strategic Sustainability?
The Blueprint
By taking the time to plan ahead and get creative, your nonprofit can work toward building a year-round fundraising calendar. If you’re starting from scratch, download GiveSmart’s Annual Fundraising Calendar. This calendar covers the major holidays, recognized awareness moments, days of giving and connection, and fun days worth celebrating.
Start by filling in your nonprofit’s pillars, such as your annual/legacy events, annual appeals, and other planned events. Assess any gaps or areas to incorporate creative ideas, like a spring giving day, or a summer text-to-donate campaign. As you’re brainstorming, think about month-by-month trends and be sure to include innovative ideas for different seasons, occasions, and opportunities.
You’ll also want to take into consideration any seasonal trends and themes based on your mission, your industry segment, and your donor preferences. For example, a nonprofit in the healthcare industry will have different trends than K-12 schools.
During this planning stage, don’t forget about resource mapping. Consider the resources you plan to receive from your community, sponsors, and volunteers. These resources could spark some inspiration for your year-round fundraising calendar.
Evaluate, Strategize, & Adapt
In addition to mapping out a year-round fundraising calendar, another important part of strategic sustainability is reviewing your nonprofit’s current financial state and thinking about how you can operate more efficiently in the future. Consider these financial must-dos to keep your nonprofit on the path to financial sustainability.
- Assessment:Evaluate your organization’s current financial health, including revenue sources, expenses, and reserves. Identify any areas of vulnerability or potential sustainability risks.
- Strategic Vision:Define a clear vision for the future of your nonprofit, outlining your long-term goals and objectives. Consider how you can align your mission with sustainable practices and financial stability.
- Diversified Funding:Explore and diversify your funding sources to reduce reliance on any single revenue stream. This may include grants, individual donations, corporate sponsorships, earned income, and partnerships.
- Financial Management: Implement strong financial management practices, including budgeting, forecasting, and monitoring expenses. Develop strategies to build and maintain healthy cash reserves to weather financial uncertainties. Consider an accounting software, such as MIP Fund Accounting, which helps nonprofits operate more efficiently and improve donor relations.
- Operational Efficiency: Streamline your operations to maximize efficiency and minimize costs. Look for opportunities to automate processes, eliminate unnecessary expenses, and optimize resource allocation.
- Community Engagement: Foster strong relationships with your community, donors, volunteers, and stakeholders. Cultivate a culture of transparency and accountability to build trust and support for your organization.
- Adaptability: Remain flexible and adaptable to changing circumstances and external factors. Continuously monitor your financial performance and adjust your strategies as needed to ensure long-term sustainability.
Increase Revenue Streams to Achieve Sustainability
Diversify Income Sources
Now that you’ve started planning for strategic sustainability, let’s dig deeper into diversifying your nonprofit’s revenue streams. In an upcoming 2023 Community Brands nonprofit study, respondents indicated that the top three revenue streams for their organizations were:
- Donations (73%)
- Grants (59%)
- Events (54%)
According to the same survey, these were the top under-utilized revenue streams:
By adopting some of these under-utilized revenue streams, nonprofits can create more opportunities for financial sustainability.
Embrace For-Profit Business Strategies
The last piece of the sustainability puzzle takes a cue from the for-profit business world. Take a look at your current income channels and evaluate if you’re “turning a profit” (ROI) and maintaining stable finances while also staying true to your mission. Think about how you can improve offerings and models of earned income to increase revenue. Here are some examples of offerings you may want to consider:
- Fee-for-service programs that can provide financial autonomy
- Improved product offerings
- Membership programs
- Subscription models like recurring giving
As Sanchez points out on Forbes.com, “A market-driven earned revenue approach also opens up a much wider pool of potential customers,” he says. “By embracing these forces, your social enterprise can be more sustainable and more reliable to your customers, all while having an even greater social footprint.”
Another way your nonprofit can embrace for-profit business strategies is by planning for investment and growth. Begin this process by evaluating resources, properties, equipment, tools, and anything else you’ll need to meet your goals. Be sure to make your nonprofit’s financial goals attainable.
Just like a for-profit business would, commit to making data-driven decisions. Let the data be your guide to keep your nonprofit on the path toward strategic sustainability.
Under-Used Revenue Streams for Nonprofits
Let’s take a closer look at some of the under-utilized revenue streams briefly mentioned above to find out how they can benefit your nonprofit. These are revenue streams outside of events, grants, and basic fundraising appeals.
Nonprofits should pay attention to online and offline channels by continuing a hybrid approach to all fundraising. Both in-person and online audiences should be included in all appeals. For example, your nonprofit can offer a virtual-only ticket to an in-person gala so that online participants can still be a part of online bidding.
Speaking of online channels, has your nonprofit tried employing paid social media and search ads for additional reach and engagement? This is a great way to bring in new donors who may not even know your nonprofit exists. Reel them in with a newsletter sign-up, and then eventually nudge them toward a contribution.
Another under-used revenue stream to consider is recurring giving. Did you know that, according to Nonprofits Source, 45% of worldwide donors enroll in a monthly giving program? In addition, the average recurring donor will give 42% more in one year than those who give one-time gifts.
Has your nonprofit considered seeking corporate giving? An example of successful corporate giving is Target’s Circle voting program, which benefits local and national organizations.
Last but not least, additional under-utilized revenue opportunities include peer-to-peer, stock donations and DAFs, and text-to-give.
By embracing for-profit business strategies, diversifying your revenue channels, and creating a year-round fundraising plan, your nonprofit will be one step closer to achieving strategic sustainability.
Why GiveSmart?
When raising money for your nonprofit, GiveSmart can help take the stress out of the process with our all-in-one fundraising solution designed to make giving easy. Request a demo today to learn more about how the GiveSmart team can help you reach your financial sustainability goals, run your most successful golf fundraiser, and more.
