What Do Beauty Pageants, ‘The Hunger Games’ and Competitive Grants Have in Common?
Fundraising to support the missions of nonprofit organizations is a complex proposition. It takes discernment — the ability to determine what types of fundraising are most appropriate for and can be undertaken by your nonprofit with the resources at your disposal. It takes gauging whether the opportunity cost (the value of the other actions you could be taking instead of what you’ve chosen to do in a given timeframe) of securing specific funding is reasonable or too high.
Organizations with thriving fundraising programs usually have one thing in common — they carefully diversify their funding streams. They ensure that no single funder accounts for more than 33% of total revenue. By diversifying, they decrease the impact that the cessation of any one source of funding would have on the organization.
A diversified fund development program employs a combination of these types of fundraising:
- Online donations via website donation pages
- Email appeals
- Direct mail solicitation
- Micro-donations and round-up donations
- Social media fundraising
- Giving days (e.g., foundation sponsored, GivingTuesday, Give 8/28)
- Major gift programs
- Corporate partnerships/sponsorships
- Planned giving
- Nongovernmental grants
- Special events (Warning: Use events sparingly!)
- Grassroots efforts that involve smaller amounts given in a variety of ways
- Video-based mission-messaging that has giving mechanisms built in
There are many reasons to carefully select which fundraising vehicles to implement; audience demographics, return on investment (ROI) and cost to raise a dollar (CRD) are a few examples.
Special events, for example, take an extraordinary amount of staff time (even if volunteers are involved) and have a high cost to raise a dollar. Small nonprofits that have one or two paid professionals in the development department can only handle so many events while also implementing a solid year-long fundraising strategy. For them, the time taken to host a fundraising event is likely to come at the detriment of other ways of raising funds — ways that could yield better results.
When Is a Grant Application Too Much?
As happens with special events, nonprofits often mistake writing grants for being the whole of what fundraising is; when in fact, grant research, writing, implementation and follow-up is just one piece of the whole fundraising puzzle, as shown in the list of diversified fundraising options I shared.
If your organization has a full-time grant facilitator, that is great and you can likely apply for and secure more grant funding than average. But smaller or new nonprofits should be selective about how many and what type of grant applications they complete each year. While grants can be a great source of funding, grant writing is a time-consuming process for an outcome that is not assured.
Competition for Grants
This is particularly true of one specific type of grant funding — transformational competitive grants. Many traditional grants are called “competitive grants” because there is a pool of applicants and only a portion will have their projects funded. But the type of transformational competitive grants to which I refer tend to be for large dollar amounts, are highly publicized and require months of prep work on the part of the nonprofits. Transformational competitive grant awards are likely to be as much as $100,000 or more, a definite holy grail for underfunded nonprofit organizations.
Nonprofits go through a pitch process where they, in the same vein as beauty pageants, showcase their programs to a panel in an attempt to prove themselves the worthiest. Nonprofits are pitted against each other in a public forum until a winner is crowned.
As a fictitious example, there may be 150 nonprofit applicants at the start, but 75 make it to round two. Then 25 or so are invited to take the grants panel on a tour of their facilities. Six are selected to make their public pitch to the panel. Then there is a grant award announcement where one nonprofit will “win” the prize. There is usually only one winner; one lucky nonprofit is awarded the $100,000. The other 149 nonprofits receive nothing. This is why some in the sector refer to this type of grant as “The Hunger Games” of grant awards.
The flipside of this scenario is that those 149 nonprofits could have spent the same number of months working strategically on building relationships with individual donors in effort to increase their number of active donors, decrease donor attrition and increase the average donation amount. They would have spent time thanking donors, showing the impact of the work and expanding knowledge about their mission to new circles of influence. In this alternate scenario, the organizations are building a solid fundraising program, which over time can lead to gifts that match or exceed the amount of the single transformational competitive grant award.
It is a bit like gambling. We can go all in on one big chance. What nonprofits need to ask ourselves is, can we afford the opportunity cost of entering the transformational competitive arena for the possibility of a one-time grant award? Or should we focus that same time and effort on building a fundraising program that will yield positive results year after year?
I cannot answer those questions for you; it is up to each organization where they allocate their human and financial resources when it comes to fundraising. But I can suggest that you weigh the options carefully before volunteering as tribute.
The preceding blog was provided by an individual unaffiliated with NonProfit PRO. The views expressed within do not directly reflect the thoughts or opinions of NonProfit PRO.
Tracy Vanderneck is president of Phil-Com, a training and consulting company where she works with nonprofits across the U.S. on fundraising, board development and strategic planning. Tracy has more than 25 years of experience in fundraising, business development and sales. She holds a Master of Science in management with a concentration in nonprofit leadership, a graduate certificate in teaching and learning, and a DEI in the Workplace certificate. She is a Certified Fund Raising Executive (CFRE), an Association of Fundraising Professionals Master Trainer, and holds a BoardSource certificate in nonprofit board consulting. Additionally, she designs and delivers online fundraising training classes and serves as a Network for Good Personal Fundraising Coach.