Beyond Grants: Emerging Funding Strategies for Nonprofits

For many nonprofits, grant funding has become increasingly difficult to secure over the past several years.

Not only have there been recent funding freezes and disbursement delays affecting government-funded grants, but competition for private funds has also risen. As a result, many nonprofits are looking for alternative options to help fund their causes.

Ultimately, the strategies that will be best for your nonprofit will depend on its current financial position and the nature of your work. However, we've put together a practical list of a few different funding strategies that many nonprofits have found useful in lieu of (or in addition to) grants.

Compelling Social Media Campaigns

Never underestimate the power of a compelling social media campaign! Today, many nonprofits leverage social media channels to engage with potential donors while raising awareness about their missions. With regular, ongoing engagement on social media and a compelling story, your nonprofit may be able to cultivate new donors toward your cause.

If your nonprofit doesn't already have a strong social media presence, now is the time to start building one. Start by exploring the social media channels that your prospective donors are most likely to be using, then focus on personalized outreach and clear communication for each campaign.

Hedge Funds and Other Investments

If your nonprofit has any endowments, reserves or existing investment portfolios, another alternative funding strategy that may be worth exploring is that of investing them in options like:

• Hedge funds
• Real estate holdings
• Private equity

The key, of course, is to do your due diligence before you make any investment decisions here. These kinds of alternative investments can be appealing, but they can also be difficult to assess in terms of risk and fair market value. As a result, many nonprofit organizations will bring in professional advisors to make investment recommendations for the long-term sustainability of the organization.

Likewise, exploring alternative investments as a nonprofit requires a strong investment policy that details asset allocations, performance benchmarks and guidelines for transparency/oversight.

Strategic Partnerships with Corporate Businesses

In addition to alternative investments and social media initiatives, many nonprofits have also found some level of success entering strategic partnerships with local businesses.

Over time, these partnerships can lead to meaningful collaborations that are beneficial to both parties. More specifically, nonprofits can receive much-needed financial support, in-kind services and other resources to further their missions.

When seeking strategic partnerships, nonprofits should explore companies with missions and causes that align with their own. From there, submitting a thoughtfully crafted proposal with mutual benefits outlined can go a long way in establishing a successful pairing.

Special Programs and Services

Depending on the nature of your nonprofit, you might also look into ways to bring in additional funding by offering special programs or services to a local customer base.

For example, your business may begin charging a fee for specialized services that used to be offered at no charge. This can be a great way to bring in additional revenue without compromising the core values of your mission.

The key to going this route, of course, is to communicate any changes in cost to your target audience, ensuring that they understand the reason for the changes. Some nonprofits will even launch a small pilot of this type of program before committing to a long-term venture.

Don't Overlook Governance and Accountability

No matter which avenues your nonprofit decides to explore in an effort to bring in alternative funding, it remains imperative to prioritize governance and accountability in all decisions.

Specifically, your board should be involved throughout every step of the process, carefully assessing risk and other implications of your decisions (such as tax implications) along the way. With the right oversight and accountability, your nonprofit can pursue new funding options with peace of mind.

Strengthen Your Nonprofit's Financial Foundation

As grant money becomes more difficult to secure, your nonprofit may need to begin exploring alternative funding sources to continue pursuing its cause and mission. The good news is that there are plenty of possibilities to consider, from social media initiatives and strategic partnerships to investments and fee-based programs.

At the end of the day, your board and a team of professional advisors should take the time to weigh the potential pros and cons of each funding option and choose the opportunity that best suits your organization's needs.

To learn more about LGT and how we can serve you, contact us here.