As we strive for economic equity and work towards closing the racial wealth gap, I've consistently emphasized the importance of entrepreneurship and philanthropy as direct paths to success. Building thriving Black-owned businesses that can provide quality jobs in the Black community is crucial. Similarly, Black-led nonprofits that actively address the racial wealth gap are vital catalysts in expediting economic equity. Despite their importance, these organizations often face significant underfunding challenges, compounded by philanthropic redlining—a topic that deserves its own discussion. A critical hurdle many face is a fundamental lack of fundraising knowledge. I address this in a class I teach every other Wednesday at the G.I.F.T. Business Center, focusing on nonprofit fundamentals. Here, I want to outline a basic framework for nonprofit founders to successfully raise funds for their organizations.
Firstly, avoid the temptation to start asking for money immediately after launching your organization. Effective fundraising involves much more than making financial requests. Here are six key aspects to understand:
Credibility is Fundraising: Initially, your organization likely lacks credibility. Many people have ideas that never materialize, making it difficult for funders (corporations, foundations, individuals) to distinguish viable projects. Start by demonstrating progress, building a knowledgeable board, understanding your issue's data and solutions, and knowing your competition in the solution space.
Bookkeeping/Financial Management is Fundraising: This might seem mundane but is crucial. Many founders overlook the importance of tracking financials, which is essential for maintaining your 501c3 status and building funder trust. If you do not have adequate financial management, you will not be able to raise money.
Planning is Fundraising: Most founders skip the business planning process when starting a nonprofit organization because they are not familiar with the name of this process. Strategic planning is necessary for you to identify what impact your organization wants to have, what programs it will have, how you will measure success, and how it will be funded. The strategic planning process is essential to fundraising because it begins to help you explain why you need the money you are asking for.
Budgeting is Fundraising: Following strategic planning, develop an annual plan. This will help you identify what impact your organization wants to have, what programs it will have, how you will measure success, and how much money is needed to accomplish this in the next 12 months. This process strengthens your ability to raise money by creating a direct link from your fundraising ask, to a specific program, and to a specific community impact.
Relationship Building is Fundraising: Intentionally networking with any and everyone can get you into some time-wasting situations for sure, but it can also introduce you to people that can open doors for you through funding, partnerships, or mentorship. You can’t ask people for money if you are never meeting people, and building a deeper relationship creates super advocates for your organization.
Reporting and Storytelling is Fundraising: Funders are to a nonprofit what investors are to a for-profit. When investors invest in for-profits they can see their return generally through stock price. Nonprofit funders are still investing for a return but instead of stock price they are looking for community impact. If the organization is not telling the stories of its successes then the funders have no way of knowing the impact of their investment, and will not be likely to reinvest. Storytelling is your stock price, so be sure you are putting out an annual report and telling stories of your program successes.
Lastly, fundraising is literally fundraising. To receive donations, you must ask. While you can cultivate a culture of passive fundraising by excelling in other areas, the most common reason people don't give is that they aren't asked. Fundraising is not begging; it's an opportunity for the community to act on issues they care about.
For funders (individuals, foundations, corporations), understand that fundraising is challenging. You can significantly ease this by proactively supporting organizations and causes important to you. Supporting small, actionable, impactful organizations is essential for speeding our progress towards economic equity.
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