October 18, 2017

Finding the right funder for your nonprofit

To raise money from a funder, it is critical to understand them–their priorities, behaviour and risk-appetite. This guide provides insights on the different kinds of funders and helps you identify those best suited for your organisation.

4 min read

As a professional fundraiser and friend to many excellent nonprofit leaders I always wished I could give them each the magic formula to unlock all the funding they need, and free them up to do what they are best at, which is not usually fundraising.

While there is sadly no formula (though magic is often involved) there are many nonprofits who have successfully raised significant amounts of money from different funding channels; they have done this by using the limited resources of their organisations to target and secure the most appropriate funder.

To be able to do this well, I believe there are three key elements involved:

  • Knowing the funders: why and what they fund
  • Knowing your organisation: what you have to offer to funders
  • Effectively engaging the funders: where, when and how

It sounds simple but too often people think they need to approach everyone and offer everything. This, however, is a waste of your limited resources and you are likely to end up not getting enough money for the effort invested. In the worst case, you can actually put off potential future funders as you’re not offering the right thing at the right time.

It is therefore critical to know what you can offer funders, which ones you can appeal to, and how best to engage with them. To do this you first need to understand why and what funders support.

The funder spectrum

There are broadly five main funder types: philanthropists (private wealth/high-networth individuals), foundations (private, corporate and international), corporates (mainly CSR), government, and retail/local.

Below I tackle the first three based on my personal experience. Of course, there are many variants within each type and every funder is unique, as is each nonprofit; hence each approach needs to be tailored. It is also worth noting that all funders are on their own journey, and what they look to fund will evolve as their journey does.

Related article: Fundraising 101: Four steps you can take today

1. Philanthropists (including personal foundations)

Often driven by a personal experience, their routes into philanthropy can be varied. In the early stages they are more likely to look for nonprofit leaders they can trust and go on a learning journey with. Initially, they also seek immediate results. However, as they develop as givers, they often become more mission driven and start taking a longer term view.

What they fund: While occasionally they fund start-ups, philanthropists are more likely to support organisations that are less risky, often ones looking to scale.

High-networth individuals at the learning stage of their journey are more likely to fund direct action/implementing organisations, usually ones working in areas of personal interest. Those that are more evolved are known to support advocacy and capacity building, and fund multiple organisations at different stages across a chosen sector.

Where, when, how: This category of funder is best found through personal networks, and sector intermediaries that can set up one-on-one meetings, small gatherings and site visits.

Charismatic founders and beneficiaries telling powerful stories is highly effective. Getting onto panels in front of prospective funders can also help build networks and credibility quickly.

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2. Foundations (excluding corporate foundations)

These are usually mission driven and focus on a few specific issues. They look for social organisations specific to a geography, sector, stage or beneficiary (or a combination of all). Foundation staff often have technical knowledge and may be more hands on, and overall more focused on outcomes.

What they fund: Foundation’s support ranges from being conservative to being more open to taking risks. They fund many types of programmes and can support earlier stage and innovative approaches as well as systemic change.

Supporting advocacy programs and organisational capacity building are both classic foundation behaviour. They often have the capacity to allocate larger amounts of money and may require more sophisticated reporting and management.

Where, when, how: There is significant information online about the funding principles, processes and deadlines of many foundations. As a nonprofit, you should not shy away from trying to get their support outside of the normal process. Utilising personal connects, attending events where they are speaking, being part of collaborations and networks, and having partner nonprofits nominate you is effective. Cold calling and emailing is rarely successful.

3. Corporates (Indian CSR)

The nature of funding depends on the maturity of the CSR programme and often the level of promoter or CEO influence. More corporates are moving towards funding with set goals and processes that benefit one or more of their local communities, staff, or customers.

Others fund based on historical support. Many corporates will want brand benefit and are also likely to seek organisations that can provide employee engagement opportunities.

What they fund: Corporates have a strong preference for mature, scaling, direct action organisations with clear results (outputs), low cost per beneficiary and clear brand and staff benefits.

Corporates who have been on the giving journey longer may choose a specific area to be a leader in; for instance supporting capacity building for the education sector. Education and livelihoods are the most common areas to be supported by CSR.

Related article: The changing CSR-nonprofit relationship: Are we missing the big picture? 

Where, when, how: Information on corporates’ CSR areas and money can be found in their annual reports given that reporting on CSR is mandatory. However identifying the key players and decision makers within the corporate is difficult as organisational structures can vary from company to company.

Search intermediary websites like CSRBox to identify corporates that fund your area. Leverage your networks within corporates to identify the right person and you can also use LinkedIn to explore possibilities. Sharing your research on an issue and offering site visit opportunities may also gain some response.

4. Retail

The best examples I have heard of are where the work of the nonprofit is very local and the communities that see it and benefit are engaged by the volunteers and staff of the organisation.

Additionally, online fundraising and crowdfunding can help organisations raise money that is unrestricted, diversified and resilient. For more information on this channel, Ingrid Srinath has written a piece on the basics of retail fundraising–why should one do it, what does it take and how to do it well.

5. Government

Governments are usually not the first port of call for most nonprofits when it comes to raising money. Unlike other channels, funds are released only for programmes that involve working closely with the government on issues and priorities outlined by them.

Nonprofits also need to have demonstrated results in a particular geography on a specific issue for them to be even considered by the government for any kind of partnership. More information on how best to engage with government is available here.

So now it’s over to you! The above illustrates what different funders are interested in and gives you some ideas on how to engage them. Now, understand what your organisation needs and accordingly, which funder is right for you, and then you can get going on your outreach and fundraising activities. Best of luck.

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John-Paul Hamilton

John-Paul Hamilton has over 20 years of experience in the corporate and non profit worlds. Most recently he led the Funding & Collaboration team at Dasra, leveraging the organisation’s abilities to support the philanthropic journey of multiple individuals, corporates and foundations to unlock millions of dollars for leading Indian nonprofits and causes.