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A Robust Funding Stream

A recession-proof funding stream is the dream of every nonprofit fundraising professional and board fundraising committee.  It is an attainable dream.  Achieving it will increase sustainability and significantly reduce financial stress and worry.

Each time there is a recession, donors pare down their giving.  For economic reasons, real or imagined, they declutter their charitable giving by reducing the missions and causes they will support to only those that they love.

At this moment, a recession seems like an unlikely event.  That makes it the perfect time to plan for a recession.  It also makes it a difficult time to plan for a recession.  Without the threat of recession, it is hard to convince others of the need to plan for one.  Luckily, your plan for creating a recession-proof funding stream can be executed without a budget increase or board approval.  Again, this is like most sustainability plans: They are cheap and easy.  They pay big dividends.  They are subtle, almost invisible, and understated.  They are seldom credited with saving an organization even though they do.

Here is the plan:

Determine which donors are giving because they love your mission, clients, and nonprofit

Determine which of the other donors, when cultivated, will love your mission, clients, and nonprofit sufficiently to provide support through a recession

Do what you can to retain the remaining donors until the recession hits

Find a replacement donor who loves your mission, clients, and nonprofit for each of those you expect to lose

When the recession hits, your losses will be a minor part of your donor base.  They will be a small percentage of the donor base and a small percentage of the income stream from the donor base.  Therefore, the loss of those donors will minimally impact your budget and operations.  In addition, your financial strength in a time of general weakness will help you retain your other donors and attract new supporters.

You are going to be growing your donor base over the next few years.  All this plan does is focus your growth on the most effective and valuable donors.  The plan encourages you to change the way you talk about donor acquisition and who you recruit as donors.

Let us assume that you have a goal to increase the number of donors by 100 and you achieve your goal.  When you report your success, you should tell the board that of the 100 new donors X are giving for reasons other than their love of your mission, clients, and nonprofit.  Therefore, you expect to lose them over time.  The others are likely to contribute to the long-term sustainability of your funding stream.  As the size of group X decreases over the years, you will have evidence that your donor recruiting and cultivation effectiveness is growing.

This approach will have two additional benefits beyond increasing the sustainability of your funding stream and financial stability of your nonprofit.  Those benefits are an increased in sustainability awareness throughout your nonprofit and a shift in focus from dollars raised to the quality of donors recruited.

Next Step:

Create a plan to increase the sustainability of your funding stream

Implement the plan

Change the way you report the success of your donor recruiting

Focus donor cultivation on igniting the passion in your donors for your mission, clients, and nonprofit

Change how you measure the success of your fundraising efforts and donor recruiting and cultivation

Besides using donors’ love for your mission and clients as a success measure, use the retention of donors and the growth of donor generosity as success measures.  The increase in retention will tell you that your initial assumption about the donor’s love was valid.  The increase in generosity will confirm that the donor’s love is more than superficial and should be something you can depend on when the economy falters or there is a local setback (natural disaster, new government regulations, change in social attitudes, etc.).

Creating a sustainable funding stream is like buying fire insurance.  You hope you will never need it but you know someday you will be glad you have it.

Take It Further:

Ask your board to help you think of other ways you can make your funding stream more sustainable

Ask your board to help you find other ways to measures your fundraising success so that success increases the financial stability of your nonprofit

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