#126 Nov/Dec 2002

How to Cope with Funding Cutbacks

I’ve been in fundraising since 1976, and I remember the panicked calls I received after Ronald Reagan was elected in 1980: “We’re losing our government funding; what shall we do?” […]

I’ve been in fundraising since 1976, and I remember the panicked calls I received after Ronald Reagan was elected in 1980: “We’re losing our government funding; what shall we do?” After the stock market crashed in 1987, the panicked calls came again, but this time it was, “We’re losing our foundation funding; what shall we do?”

Many groups are panicking again, as both foundations and government cut back. But there are steps that organizations can take when funding evaporates.

The first order of business is to create a strategy team of five to seven people, including board members, staff, volunteers, clients and friends, who can devote seven to 10 hours a month to planning and fundraising – this should be the team’s sole mission.

Learn to Raise Money

Lack of fundraising skills needn’t be an obstacle. Engage a trainer for a three-hour or full-day training session, which can provide the team with enough information to create a fundraising plan.

Consultant fees range from $500 to $1,500 per day, but some consultants will donate their time or defer payment. Do not hire on commission. The United Way or a nonprofit management assistance organization in your community can refer you to people willing to donate time. Check the references of any consultant, paid or volunteer. The trainer should be a skilled fundraiser, enthusiastic, flexible and able to understand and respond to your organization’s particular situation.

Next, the team must explore cost-cutting measures. This includes determining how long your organization can operate at its present level of service, amount of savings, if any, and whether staff, programs, office space or other functions will be affected when funding expires.

With this information, you can create a cash-flow budget projection, estimating how much you need each month for a minimum level of service. These projections will vary, with sharp cuts now, followed by projections of more revenue available in a few months. Ideally, you are aiming to have the lowest expenditures for the first three or four months, so that you can use what little money you have on fundraising strategies.

The Fundraising Plan

Once you have a cash-flow budget for the next four to six months, you are ready to create a plan. Here are some strategies and sources to consider:

Individual donor programs require an ever-expanding network of contacts; each new donor leads to more new donors. As part of annual giving campaigns, these programs can include membership drives, dues, subscriptions, pledging, direct mail or small mail appeals, Internet appeals, door-to-door canvassing and major gifts.

Special events, such as concerts, are usually planned in terms of the net income realized: small (net $1,000-$5,000), medium (net $5,001-$15,000) and large (more than $15,000). However, keep in mind that the size of the event reflects not only the profit earned, but the amount of work, lead time and front money required.

Fees for service can be set up on a sliding scale so you can continue to serve your constituents; those who can will pay what they can afford.

Sale of products such as t-shirts, bumper stickers, buttons or products such as toys, games, stationery, etc. can also be profitable.

Sale of information in booklets, pamphlets and manuals can be another moneymaker. Even if you sell these publications at four to five times their production cost, it’s still cheaper for buyers than what an attorney, doctor or regular bookstore would charge for such information.

Training/education programs with a charge per participant can provide continuing education credit for doctors, lawyers or other professionals, or seminars for the general public.

Honoraria can be charged for speaking at service clubs, guilds, professional organizations and other groups. Your group may have spoken at these gatherings for free, but if you ask for a reasonable honorarium, you will probably get it.

Grants from corporations, service clubs (Kiwanis, Rotary), United Way or unions are available and should be explored.

Religious institutions often give grants through local parishes and from national offices. Churches can also take a “second collection” for you on Sundays. Many houses of worship will loan you computers and phones or provide office and conference space rentfree.

Loans of various types, lines of credit and interest rates can be arranged through a bank, savings and loan or credit union or through an individual, foundation or corporation. Loans can be used for front money or for cash flow problems until your fundraising begins to pay off.

Be conservative in estimating profit and liberal in estimating costs, such as time and people. Some sources will raise larger amounts over time; others provide an immediate but smaller payoff. A good fundraising plan contains both elements. Don’t rely on just one or two sources, no matter how “sure” they may be.

The first few months can be frustrating – there’s a lot of work, often without a clear or immediate payoff. Strive to maintain enthusiasm and momentum. Many groups discover previously unknown resources within their supporters and a depth of creativity and willingness to work that means the groups will not only survive, but grow.


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