How to Fund Your Nonprofit

Thinking about starting a nonprofit? If so, this post outlines four questions you need to answer before you get started. I did a podcast about the nonprofit myth a while back. In that podcast, I outlined the idea of money flow as it relates to companies and nonprofits. The key issue about starting a nonprofit for your cause is that as a nonprofit, you still need money. Have you figured out where the money will come from?

How to fund your nonprofit

Why Your Nonprofit Needs Funding

The idea I hear often is to start a nonprofit to serve the homeless (or other group that needs help) and then individuals will give me money. Sounds nice, but it rarely works. Assuming you have a group of people you really want to help, you need to find a way to fund your effort.

  • Money is required: Serving people takes work and resources. The more you serve, the more money it will take. Might just be gas money and time at first, but it will soon grow as you see the need and have compassion to serve. You will want to do more, so money will be required.
  • Energy is required: At first you might be busting with energy. But soon, the other requirements in life will start to crowd out the amount of energy you have left to serve your cause.
  • Time is required: Yes, and more and more time. Time and energy will go hand-in-hand.
  • Money is a multiplier: The above reasons might feel negative, so this reason should help encourage. With money, you can serve many more people.

Without some sort of funding, your cause will soon suffer. You may start out strong and begin helping, but over time you will have to back off, leaving a void of hope where you once provided hope. Funding buys time, resources, and help from others. Funding is needed to fuel your passion – even for nonprofits. <click to tweet>

Key Questions for Nonprofit Funding

These questions will help you get to some funding sources.

  1. Who are you serving? Be very clear about who they are, their need.
  2. What is their problem or pain?This might take some time, because is it not always obvious. For examples, many people who take meals-on-wheels do not need free food as much as they need the delivery of food. Broke people might need a job more than just money or food. Be clear of the main problem.
  3. What can you offer them in exchange for money? This is the benefit you provide. If you are working with a cause for people or companies with money, be clear about what you offer and how they benefit. If you are serving the poor, you still might be able to help them for money. Think of Dave Ramsey, he has a huge ministry by serving broke people who mostly pay him directly.
  4. Who are the related industries? Here is where you look for partners. If you are helping the homeless, you might look for hotels and apartment complexes that have space. If you are helping the hungry, look to restaurants, food distributors, and farmers. If you are serving small business people, look at CPAs and attorneys.

How to Fund Your Nonprofit

Most nonprofits start and go out asking for donations. And, most find that donations are very hard to get. As a nonprofit, you are a company, so you need to think like a company does. So here are the fusing ideas:
  • Create products that add value. A friend of mine serves handicapped people who want to go to college. He is considering an educational product for parents of high schoolers who are handicapped. He will show them how to find the right college and how to help their child prepare. Whether an ebook, coaching program, or any other form, this will create huge value for his cause.
  • Develop memberships. Many nonprofits have a membership model. As a member you get certain benefits, which might be access to meetings, news reports, etc. When you ask someone to become a member, be prepared to answer the question “What is in it for me?”
  • PR donations. Certain causes can get donations for the warm hearted feeling you give people for your cause. This funding method is great when you can get it, but expect it to go away in the future. The best way to get this kind of funding is to connect with a company who wants the publicity for helping. If you find them, give them lots of mentions and try to make them a partner in the cause. The more ownership they have, the better.
  • Government funding. You will often see cities, counties, and states funding nonprofit work. This is the most dangerous since many nonprofits begin to plan on this money, and it dries up in a hurry. One election or council meeting can kill it overnight.
One last thought. Perhaps you should forget about nonprofits and instead develop a for-profit company. In many cases this will be easier to do.

Question: What other ways can you think of to fund nonprofit work? You can leave a comment by clicking here.

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