Fundraising Success Builds on the Right Funding Model
Book - Funding Models
Setting a funding strategy is one of the most important actions a nonprofit can take, but getting it right requires thought, analysis, and decisive action. Finding Your Funding Model provides a practical approach to determining a strategy to ensure long-term sustainability.

Authored by Peter Kim, Gail Perreault, and William Foster, of The Bridgespan Group, a nonprofit advisor, the book—at 72 pages, actually more of a booklet—outlines steps nonprofits can take to identify a funding model appropriate to them based on their current funding strengths and weaknesses, and then fashion a plan to support long-range funding goals.

The authors don't mince words: “Most nonprofit leaders spend an enormous amount of time on fundraising, but typically they have little idea how they will secure the money they need over the next five years.”

Effective fundraising flows from an intentional funding model, without which even the most brilliant program model can suffer, the authors contend: “It’s all about investing in your organization’s funding strategy with the same intentionality as you invest in its program strategy.”

When they’re small, nonprofits often rely on a core of committed donors or cobble together funds from different sources. But, the authors note, as nonprofits grow, personal relationships and catch-as-catch-can won’t support larger scale needs. That’s where a funding model comes in.

So, what is a funding model? The authors define it as “a methodical and institutionalized approach to building a reliable revenue bases that will support an organization’s core programs and services.”

Finding Your Funding Model defines six steps to identify and develop the right funding model:
  1. Analyze your current approach to funding.
  2. Learn from the funding approaches of peer organizations.
  3. Identify and narrow your range of funding model options.
  4. Evaluate the potential and costs of short-list funding models.
  5. Select funding models to implement.
  6. Develop an implementation plan.
It’s straightforward, understandable advice, but, the authors caution, not every nonprofit may be ready to embark on this particular journey. They suggest that their approach works for organizations that are free of immediate financial distress, have annual revenues of at least $3 million, have clear programmatic goals, and are willing to invest in staff, IT services, and other areas to support a funding model.

Organizations with annual budgets below $3 million, the authors say, still benefit by identifying promising funding types and investing in them by, for example, hiring a chief operating officer to free up the CEO for more fundraising activities, hiring development staff, or creating or enhancing a fundraising board.

Regardless how large or small a nonprofit may be, long-term fundraising effectiveness correlates to how much the organization invests in the activity. At the very least, settling upon a funding model enables nonprofits to methodically assess each opportunity, as opposed to seeing every funding lead as a good lead, the authors write.

Detailed appendices provide granular detail on work plans, implementation, and research, which by themselves provide valuable guidance to nonprofits looking to better chart their financial future.

Finding Your Funding Model can be downloaded from The Bridgespan Group.

Reviewed by Peter Lowy

December 2011