Tips to Improve Your Funding Options

Does your fundraising strategy consist mainly of a vague idea to raise “more money than last year” and little else? Without financial clarity, and a strategy to optimise your organisation’s sources for funding, your nonprofit will find it difficult, and next to impossible to secure the monies that it needs to operate at a sustainable level and create actual impact for your cause.

The following strategies can help your organisation broaden its base of financial support by increasing the number of sources it has for funding.

Grants

Rather than relying solely on donations from individuals, consider searching for grants that are a good fit for your organisation. Grants can come from Federal or State governments as well as public and private entities such as foundations and corporations.

The applications process is typically quite lengthy, and complex, and there is usually stiff competition for these funds, so your NFP can benefit by bringing on board an experienced grant writer to help them with the proposal and applications process.

Sponsorships

Instead of trying to do everything on your own, consider reaching out to third parties for help in securing funding, and other resources, that will enable you to provide services and advance your cause.

Sponsorships and other collaborations can come from the commercial and government sectors, or might involving partnering with one more parties from the not-for-profit sector that will allow each to focus on performing the work that they do well. Groups can also cooperate and allow each to access resources that the other has to increase the amount of work that is performed by both groups.

Maximise Individual Contributions

Nonprofits can increase their funding simply by looking for opportunities to maximise the number and amount of individual donations that they receive.

To accomplish this goal, your fundraising approach should seek out ways to make it easy for supporters to give online, and give by their preferred means of payment.

Focus on encouraging repeat donors by developing a monthly giving program.

Approach board members and other key influencers that are connected with your organisation to reach out to potential big donors to support your NFP with a large contribution.

Crowdsourcing platforms can be a great way to raise awareness about your cause and encourage donations when they use storytelling to illustrate what is at stake if the issue your organisation is trying to tackle remains unsolved. Options to customise the message and share the campaign easily on social media will increase the number of folks that see your plea and follow through with a contribution.

Special Events

Standard fundraising events, such as charity auctions, galas and balls can be a good way to raise funds for your organisation, but only if they are cost-effective to host. If your NFP will not make a net profit from the event that’s worth the time and effort it takes to plan the event and hold it, you may want to limit the number and type of events that you throw as part of your fundraising efforts.

Consider Options that Increase Your Capacity for Self-Funding

While nonprofits are not designed to operate at a profit, since their main function is to serve the public good, this doesn’t mean that they should operate in an unsustainable manner. Your nonprofit can increase the soundness of its finances to look for ways to self-fund its growth. Does your nonprofit have assets that can be used to fund operations?

For example, would you be able to offer beneficiaries a higher level of service if you charged a fee for certain services? Would rents or activity fees allow you to do more good work, without compromising your core mission and goals? Is there a way to invest some of your funds that will enable your organisation to generate a passive income stream that could be used to fund operations and build capacity? Would selling some products and services allow your organisation to raise the funds that it needs while remaining in alignment with your organisations values?

While each NFP’s answer will be different to questions like these, if income generating activities don’t violate your nonprofit’s values or create another conflict, they can be a good way to raise the growth supporting funds that your organisation needs to survive and thrive.

3 Bookkeeping Mistakes Your Club Or NFP Might Be Making

The end of the financial year is a great time to take a look at your bookkeeping processes to see what is working and what is not.  The systems which once worked for you may no longer be appropriate, especially if you have seen a growth in membership.

Here are 3 key bookkeeping mistakes made by many clubs and not for profit organisations.  Are you making any of these?

1.  Keeping paper based records.

This is one of the biggest mistakes you can make.  Keeping paper based records is a security risk.  Anyone can access them and – even worse – alter them without you even realising.  (And I hate to ask it, but where are your backup records?)

2.  Using the wrong financial record keeping software.

Sometimes your accountant will advise you to use accounting systems which, although excellent at what it does, is too advanced for you or your treasurer to use.  If yours is a smaller NFP you don’t need an accounting system full of bells and whistles.  Often it can be hard to imagine that errors are made purely by accident. Choose club software such as Admin Bandit software which gives you everything you need to accurately manage your accounts without giving you a headache.

3.  Not checking your records with the bank.

This is a basic mistake but it happens more often than you would think possible.  Sometimes it is an oversight and sometimes it’s a confusion over who is responsible for the task.  Other times it is because one person actively prevents it happening, and that’s when they know there is something to cover up. You can’t be confident in your records, especially if they are paper based, without confirming the details with your bank.

Now is the time to check the systems you are using to see whether or not they are working for you, and if there is a better, more secure way to manage your bookkeeping and club finances.

The Letter of Comfort

We’ve talked before about the importance of managing your finances but sometimes, particularly when your Board of Management is inexperienced, you can run into difficulties. In fact, sometimes even major organisations need their support. Recently, Forestry Tasmania was issued with a Letter of Comfort from the Tasmanian Treasurer guaranteeing its ability to repay a loan. We’ve also seen a couple of smaller organisations require one recently.

The Letter of Comfort had almost disappeared but lately seems to have been making a comeback. Given the economic climate, that probably should not be a surprise. In this post we discuss letters of comfort, what they are and what impact they might have on your organisation. It might be something you come across shortly.

In financial terms a letter of comfort is a letter from a parent organisation to or on behalf of a subsidiary, offering support to the subsidiary’s assurance that they can and will honour their debts and loans.

Creditors and or Lenders may request a letter of comfort from a subsidiary before they will put a hold on legal proceedings that may be started against them to recover outstanding monies and it is usually issued as a form of back up from the parent organisation to assist them to cover their debts or loans.

Many companies and money lenders will accept a letter of comfort as a reassurance that they will get their money, even if no clear terms of action or promise of financial assistance are outlined.

If your organisation is struggling financially, a letter of comfort from your parent organisation will give you room to breathe.

If you have organisations under you, you may one day be advised to write a letter of comfort as an alternative to a legally binding contract that outlines your intentions to undersign financial responsibility for a subsidiary, but you should be aware that under certain circumstances a letter of comfort can be deemed to be as legally binding as any contract.

If your letter is found to promise financial support in a court of law, you may become liable for all or some of the subsidiary’s debts and loans.

Be very careful in how you word your letter, leave nothing open to interpretation and consider using dot points to clarify what you are or are not willing to assume financial responsibility for.

A carefully worded letter of comfort may ease the minds of creditors without placing you under any legal obligation to provide financial assistance. However, in the case that any form of financial assistance is offered by the parent organisation, you would be well advised to seek professional advice about creating a legally binding contract, so that your intentions cannot be misinterpreted and your good will taken advantage of in the event that the child or subsidiary cannot actually honour their debt.