Many nonprofits are facing the prospect or reality of losing funds from traditional sources. This could be in the form of a reduction or complete loss of funding from long term partners including foundation and corporate grants and government funds. Organizations that in the past depended on a small number of institutional funders can’t help but see the writing on the wall today. The most sophisticated and forward thinking organizations are now preparing their boards to accept new strategies and related investments (expenses) that will attract different sources of funds.
To consider in 2013: Assume nothing when it comes to your past funding history. It is critical to look into a full range of funders and revenue opportunities moving forward.
To consider in 2013: Include financial advisors in your cultivation and recruitment strategy to both gain from their experience and insights and to be considered as a target for philanthropic giving by their clients.
Over the past 20 years, the number of foundations has nearly quadrupled, with more than 66,000 in operation today. They distribute more than $32 billion each year. The proliferation of nonprofit organizations needing those funds has been just as dramatic. As a result, many foundations are now demanding that their grantees demonstrate how grant dollars create measurable change. Net net, – despite the increase in giving from foundations – there is overall more competition for grant dollars among worthy nonprofits. Cultivating personal, meaningful relationships with corporate, family, and community foundations will become increasingly important in 2013.
It is interesting to note that consistent with the increased use of wealth advisors, HNWH are now more engaged with community foundations as they are more often seen as powerful agents of social change. The assets of community foundations are aggregated from contributions from numerous donors and are distributed either as donor-advised funds or independently by a governing board. According to the Foundation Center, there are more than 700 community foundations in existence today. Recent statistics suggest that giving from community foundations has increased more than from any other kind of foundation.
11. Impact Investing
In August 2011, this blog presented an overview of “social impact bonds” – also known as “pay for success.” Especially relevant for human service provider organizations, these are percolating in Massachusetts and also at the federal level. They are based on the concept that if programs backed by investors succeed in reducing or eliminating the need for costly services and interventions, the government will realize big savings. In turn, investors are rewarded with healthy returns from Uncle Sam or state governments. On the other side of the coin, if the programs fail or do not deliver to performance standards, no returns change hands. Under these circumstances, investors would become donors. For deeper consideration on this subject see “Boards as Investors and Donors”.
To consider in 2013: Treat your donors as investors and be prepared to provide them the level of scrutiny they expect – and deserve.
12. Social Investing
Fund raising for front line healthcare organizations needs to undergoing a fundamental shift under the new Affordable Care Act. The reimbursement model will move from a fee-for-service to a fee-for-health improvement model. Accountable Care Organizations will involve many caregiving providers who are responsible for the health of thousands of patients in their plan. Hospitals will make more money for reducing the number of patients in their beds and emergency rooms. The role of philanthropy in this new paradigm is just beginning to emerge. For deeper consideration on this subject please click here and here. To consider in 2013: This paradigm shift will affect everyone from hospitals to allied health organizations and to every employer and employee. Philanthropy may help to produce healthier communities, lower health insurance premiums and a more economically viable region.
For more information about Copley Raff and its spectrum of not for profit consulting services, please see www.copleyraff.com.
Have a development, executive recruitment, or campaign strategy or management challenge? Let’s talk! Click here to connect with Rebekah Kaufman, Director of Consulting Services at CRI.
