Every organization needs money to operate. Nonprofits are unique in that
they usually have to convince other people that what they are doing is
worthy of their donation. Raising money is a continuous process for the
nonprofit, and there are many different ways to raise money. The Bridgespan
group, in an article posted on the Stanford Social Innovation Review,
identified 10 different models for fundraising utilized by large successful
nonprofits. By no means is this an exhaustive list or the only way nonprofit
social ventures have been able to thrive, but it provides some of the
time-tested and battle hardened methods for helping keep an organziation
thriving in even the most difficult times.
The models have been categorized by Bridgespan according to their source of
funding. The five themes are as follows: many smaller individual donations,
large donations by few individuals or foundations, the government,
corporations, and finally a mix of funders. Within many of these there are
subcategories, which will be detailed below and combined they create the 10
models described above.
So, what are these ten methods?
Heartfelt Connector -
Kiva is the perfect example of a Heartfelt Connector in that they try to
build relationships (visible or invisible) between donors and
beneficiaries. The strong connection, which keeps people coming back to
fund more entrepreneurs, allows Kiva to grow and thrive.
Beneficiary Builder -
Private universities are the best examples in that they charge for their
services (an education/degree), but the costs are nowhere near covered
by the service charges. As such, they rely heavily on previous
beneficiaries donating in order to provide their products and/or
Member Motivator -
The organizations that utilize this model provide something that
immediately benefits individual donors. For example, the National Wild
Turkey Federation (NWTF) expands wild turkey habitats to protect and
promote wild turkey hunting. It receives its funds through membership
fees, merchandise, banquets, and other small forms of raising funds. The
key is that individuals see and feel the personal benefit they receive
from the organization, even though the organization serves a cause
larger than the individual stakeholder.
Big Better - This
model is exactly as it sounds. It relies on one or a couple of large
individual donations. While there are few organizations that utilize
this model, a common example is found when an individual personally
provides the money for the organization and heads the efforts to pursue
Public Provider -
BRIDGE Housing is an example of a Public Provider in that they receive
funding from the government to provide a service that the government
would normally be obligated to provide. BRIDGE provides low income
housing in Northern California, and has grown to the point that they
also search for additional funding sources.
Policy Innovator -
This funding model relies generally on an organization providing a more
effective and/or less costly than a traditional government program. The
reason why they differ from Public Provider is that they are not clearly
compatible with existing government funding programs, and therefore need
to use solid evidence to receive support for their program.
Beneficiary Broker -
Many nonprofits compete for funding in the Beneficiary Broker model
because their goal is to provide a given service more efficiently and/or
effectively to a variety of beneficiaries who are free to choose which
organization they receive help from. This allows nonprofits to compete
for government dollars, as they will have to prove they are the best
option for beneficiaries to receive and utilize government resources.
Resource Recycler -
Your local food bank is a great example of a Resource Recycler in that
they utilize individual and/or business donations of usually products to
individuals who could not normally afford them.
Market Maker - In
markets that would be unethical to monetize, such as organ donation,
Market Makers fill the gap. These nonprofits are able to provide
services that would be scandalous or unlawful in a for profit setting,
even though there is a great need for the services.
Local Nationalizer -
Your very own Gumball Capital generally acts as a Local Nationalizer.
Our ability to raise money stems mostly from activities occurring at a
local scale that trickles up and helps out at a national level. By
focusing on providing great value at a local level, we are able to
empower individuals to create big change in their communities and even
Which one do I choose?
Your choice for a model will depend largely on the type of service you
provide, and may not appear immediately. If the first model you try doesn't
work, try a different model. Maybe you can combine a couple at the same time
and see which one works best. As long as you keep an open mind you should be
able to stumble across a model that works for you, and it may not even be
one of the models suggested above!
Even though this list isn't exhaustive, it does give quite a few examples of
successful models. What wasn't discussed above, and should maybe be
considered, is the idea of offering a product or service that provides
revenue. The most important thing is to be creative, think about what needs
you are trying to solve, and what will help you pursue your mission. By
focusing on fulfilling the mission first and foremost, a fundraising model
may fall into your lap, and if worse comes to worst, you can always reach
out to local nonprofit executives for advice and help in developing a
Landes, William, Kim, Peter & Christiansen, Barbara. Stanford
Social Innovation Review. Spring 2009.