* Individuals. They are the largest source of funding for nonprofit organizations. According to Giving USA, total charitable giving in the U.S. reached more than $303 billion in 2009, and 75% came from individuals.
* Corporations give in order to get…exposure, publicity, and community respect. Their funding is sporadic and tends to revolve around particular campaigns, events, and projects. Corporate funding can be a good source of support for new initiatives, special programs, and special events. Look for opportunities to form partnerships for sponsorships.
* Federal, State and Local Governments. Federal, state, and local government grants fund many programs provided by nonprofits, especially in areas such as ecnomic development.
* Federated Funds such as United Ways, United Arts, etc., can be steady sources of relatively large amounts of money to well established nonprofit organizations.
* Grantmaking Public Charities. These organizations are a cross between a private foundation and a charity. They typically receive funding from the general public, government, and private foundations. They may do public service, but primarily raise funds and provide grants to charitable nonprofits that provide direct service. You can find many such grantmaking public charities in your local area.
* Foundations come in various sizes and types.
Private Foundations include:
1. Corporate Foundations – private foundations, but their boards are often made up of corporate officers. Their endowment funds are separate from the corporation and they have their own staff.
2. Family Foundations – receive endowments from individuals or families. Examples of family foundations are: Gates Foundation, Rockefeller Foundation, and Ford Foundation. These family foundations have endowments in the billions, but most family foundations are much smaller, tend to fund locally, and often have little to no professional staff.
3. Community Foundations – public foundations that pool the assets of many donors. They work to improve their communities through grant-making, awarding scholarships, and providing services to donors. Community Foundations have become very active in providing donor-advised funds for donors who want to become more purposeful in their giving but don’t want to set up their own private foundations.
Ongoing support is usually gained through:
* The Annual Fund. An annual appeal to a core group of constituents. Such funds are usually available for any use, and may represent a large percentage of your annual income.
* Sales of Products and Services. Some non-profits or provide services that can represent a substantial income stream. For example, the Girl Scouts has an annual Girl Scout cookie sale and Goodwill Industries is probably the largest nonprofit retailer. Earned income must be related to the mission of the organization, or it can be taxed as unrelated business income.
* Multi-Year Grants. A grant-giving organization such as a foundation may provide restricted funding for a particular project or program, or unrestricted funding to help cover the overhead costs of running the organization.
* Endowment Income. Many large nonprofits, such as higher education institutions and healthcare organizations, build up large endowment funds that produce interest that is used to support the organization.
Episodic funding can come from foundation or corporate grants or special events. These funds may be restricted to one purpose or devoted to unrestricted use by the nonprofit.
Two Special Types of Fundraising
Two types of funding fall outside the scope of ongoing and episodic methods and include a wide range of sources.
* The Capital Campaign. A capital campaign is a multi-year fundraising campaign with a particular goal such as:
* funding a new building
* raising funds for a particular project, such as cancer research
* increasing a particular asset such as an endowment
* Planned Giving. Most nonprofits now have planned giving programs which enable a donor to confer a gift at the time of his/her death or to give a large gift immediately while receiving income during the donor’s life.
A good fundraising plan will include a balance of these techniques and sources. Establishing unrestricted, ongoing funding is the most important, followed by other funding that will grow the organization.
Karmen A. Booker is an Attorney, Business Consultant and Owner of Compu-Perfect Professional Services, a business consulting firm specializing in Business Entity Formation (Corporations, Limited Liability Companies, and Nonprofit Corporations), Completing 501(c)(3) Federal Tax Exemption Applications, Grant Research and Writing services, and more.
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