Insights for Non-Profits

Recently our Endowment & Foundation Services team was asked how to go about finding funding sources for a newly created foundation. Sometimes a non-profit just needs to know where to look for funding opportunities and guidance on how to get the process started. Once the groundwork is laid for building an effective fundraising structure, an organization can be on the path to reaching its long-term goals.

There is no minimum amount of assets required to start a foundation. Sometimes, a non-profit might seed a foundation with excess cash from its operations. Other times, assets might be donated by a long-time board member through their estate; or maybe the non-profit finds itself in the unique situation of having never before undertaken fundraising.

As such, there may be an opportunity to jumpstart funding with a campaign built around a targeted fundraising amount and a specific purpose (i.e., in this case, for the purpose of establishing the foundation). The non-profit may have to set-up the infrastructure to enable giving to occur. Here are few recommendations for finding funding sources for a foundation start-up:

• An ideal starting point for a foundation start-up to raise capital is among friends, relatives, and colleagues that are closest to the organization. Start by assessing those individuals within your inner circle of influence. Ask those closest to you for referrals to their contacts within the community. This will help grow your donor and prospect base quickly. The organization could create a matching gift challenge by trying to secure a large funding gift and matching donor gifts from family and friends to help maximize giving opportunities to the foundation.
• It is important to build the foundation board with members who are passionate about your mission and well-connected within the community. Raising funding for a new foundation is easier when you recruit your board of directors with fundraising experience as one of its core skills and board responsibilities. When recruiting board members, set the expectation that board members will be required to help with fundraising and make their own financial commitment each year to the foundation. Seek out business and community leaders who are passionate about your organization’s mission, can introduce the foundation to people of influence, and have the capacity to make financial investments in the foundation.
• Many non-profit organizations are seeing a reduction in state and government funding of different agencies and as a result, causes many to either close their doors or consider consolidating services in the community. Short of complete consolidation though, some organizations find success by teaming up with complementary organizations. For example, two organizations could share funding resources like databases while controlling expenses without impacting services. Foundations may also try researching local grant making foundationsand corporations in its community to request start-up funding grants to help get the foundation up and running.
• One way to help build excitement and promote the foundation in the community is to coordinate a kick-off event. A launch event can be a fun and effective way to secure funding and build awareness of the organization’s mission. Very popular online fundraising initiatives like Go-Fund Me or Crowdfunding programs can be used as creative launch events targeting family, friends, and prominent donors to provide a funding platform to raise financial contributions. Some organizations will hold fundraisers, galas, auctions, and black tie dinners. There are many different ways to raise money from these events, but what’s most important is to remember to thank the donors that helped to provide funding for the foundation start-up.

Once you have secured the funding resources necessary to create the foundation, it will be vital for the organization to keep the funding momentum going. After exerting so much energy just to get the new foundation up and running, creating and maintaining momentum after the initial launch can be a difficult and daunting prospect, but is necessary to ensure sustainability. New foundations are formed all the time, and good prospect research will help you to keep track of new funding opportunities available in the community.

Many grant making foundations deliberately maintain a low profile as a way of managing the number of applications they receive, so investing time and effort in prospect research will help to widen your prospect pool of potential funding sources.

To maintain momentum, create a prospect database to capture information about potential donors and foundations, your funding requests to them, and when the opportunity to reapply becomes available it may help your organization develop a steady income stream of funding.

The backbone of any successful fundraising operation is built on gaining a strategic understanding of the overall fundraising process, against which activities and goals can be established. Download our Fundraising Guidebook to learn more about the steps of the “Fundraising Cycle” as well as a review of the “Gift Pyramid”, a diagram explaining the different types of gifts a donor may make, and the motivations underpinning each stage.