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Funding |
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Without adequate funding, a nonprofit can not achieve its mission. Creating a viable funding model, however, is enormously difficult.
First and foremost, there is little information available to help the leaders of any individual organization determine the best funding mix for a nonprofit of their size in their domain—or think about how that funding mix ought to change if the organization wants to grow. As a result, “conventional wisdom” such as “Diversified funding makes the most sense,” or “Earned income has a lot of potential,” tends to become the rule of thumb. This is dangerous because conventional wisdom is at best incomplete and at worse can be flat-out wrong, given a particular organization’s size or program activities.
In addition, the chase for dollars often pressures an organization’s leaders to make trade-offs between activities that can attract funding and activities that are more germane to its mission. Important programs can be diluted or even derailed, and outcomes suffer.
Funders can also reinforce a bias, common among nonprofit leaders, to allocate resources to immediate, program-related needs rather than invest in other, less visible needs like building the organization’s capacity. Additionally, the funders that can provide money today may not be the ones who can best support the organization into the future. The result is another tough trade-off, one that can put an organization’s long-term health in jeopardy.
We believe organizations need to be as rigorous in their approach to funding as they are when building their program models. In other words, running and growing a sustainable, effective organization requires a strategic, fact-driven approach, even if the funding landscape is hazy, and the true rules of engagement are not clear.
We hope the research and case studies offered here will serve as a useful starting point in piercing the haze and provide some emerging guideposts for nonprofit leaders trying to develop sound funding strategies as well as for those who fund their work.
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