This article was previously published on forbes.com: https://www.forbes.com/sites/forbesbusinesscouncil/2020/11/03/four-considerations-to-help-nonprofits-increase-revenue-in-2021/?sh=6dfb44294263
The year 2020 has indeed been a year like no other. We're experiencing a global pandemic, a stock market full of ups and downs, and for many of us, insurmountable job losses. Nonprofit organizations have especially been hit in several ways.
Through my time helping nonprofits increase their grant funding, I know that as a result of the pandemic, nonprofits are doing more work to meet the needs of society today. Unfortunately, they have to do so with less funding because in-person fundraisers have had to come to a halt and traditional ways of funding have been eliminated. Although funding from the CARES Act has been helpful to many, some nonprofits have been forced to lay off employees or shut down altogether.
Individual and corporate donors might decide not to give at the same rate as previous years or decide to give nothing at all. Some individuals might have experienced a job loss or reductions in income historically earned from the stock market. Businesses fear future potential revenue losses and may decide to cut back on expenses and their donations.
This is a lot to think about for any nonprofit founder, executive director, board member or anyone else responsible for making decisions. The good thing is, there are ways to help your organization prioritize time and determine what will deliver the most immediate positive impact on revenue. Thinking through the following questions, if you haven't already, can help improve the financial position of your nonprofit organization for 2021 and beyond:
How can we keep our head above water this year and beyond?
Nonprofits were blindsided when their most significant source of unrestricted (for the most part) funding "disappeared.” Many have attempted to pivot to online fundraisers. In any event, what has always been the case even before Covid-19 is the importance of diversifying revenue. The problem is, many did not listen before. Perhaps now is the time to consider this.
How do we create diverse revenue streams?
Grants, corporate sponsors, fundraisers, in-kind donations, individual donors and program income can potentially fuel diverse revenue streams. Consider how much of your revenue should come from each of these sources, if at all.
In 2017, Charity Navigator reported 70% of funding for most nonprofits came from individual donors. This number is an approximate industry standard but still varies by organization and program type. For example, in my experience, nonprofit healthcare providers and similar organizations tend to be heavier in insurance reimbursements and other forms of income, so expecting to get 70% of funding from individual donors would not apply.
Another thing to consider is the unique nature of grants. Grant funding can be multi-year or applied to year after year, which provides excellent income stability; however, grants also require increased capacity to execute the program, submit a competitive application and manage the grant. Don't be afraid to seek help and access resources to learn more about effectively pursuing grants.
What planning is required to help meet our financial goals?
Have you ever heard of the phrase, "When you fail to plan, you plan to fail"? This saying is especially true now.
A budget is made up of revenue and expenses. When significant events occur, it makes it difficult to estimate revenues and expenses. However, effective planning can be beneficial.
Remember the thought shared regarding diversifying revenue streams? Well, after determining what percentage of your revenue should come from each source, the next step is determining where it should come from.
Consider creating a list of potential donors to build relationships with this year. For example, if your goal is to raise $100 this year and your list of potential donors has historically totaled $500, consider upping it to $750 to offset the number of additional noes you might receive in this challenging environment. Do the same for each revenue stream, and have an actionable plan to meet your funding goal.
How can we effectively leverage program income?
After checking your state guidelines and speaking with your accountant about program income regulations in your state, this revenue source can potentially be a good source of self-sustaining revenue. This is especially key when applying for grants. In fact, I've found that program income strengthens grant applications. A recurring question on many grant applications is what other resources of funding will be applied to your program and how you will sustain the program after the grant funding period has ended.
For one successful example, I came across a nonprofit theater company that was at risk of closing its doors due to Covid-19. The company was unable to host in-person performances. Instead, it streamed performances online. The theatre used technology through live streaming to continue to offer its programming and expand to a global audience. As a result, ticket sales grew substantially, and the theater company was saved.
This example might not apply to every nonprofit, but it serves as encouragement to think through what possibilities are in store for your organization.
There is hope in obtaining a fully funded budget in 2021. These considerations are the backdrop to help support productive conversations with your team, as well as thoughts to explore during your next board meeting.
- Shavonn
Shavonn Richardson, MBA, GPC is Founder and CEO of Think and Ink Grant Consulting™. She is a grant professional, an active speaker, and serves on the Board of Directors for the Grant Professionals Association.
Shavonn earned a BBA from Howard University and an MBA from Emory University. She earned the GPC (Grant Professional Certified) credential from the Grant Professionals Certification Institute in 2020.
Learn more at www.thinkandinkgrants.com