If I had a million dollars…” You might recognize this catchy lyric from the ’90s hit song by Canadian band Barenaked Ladies. It’s one of those tunes that gets stuck in your head instantly (you’re welcome!).
For those unfamiliar with the song, the lyrics paint a whimsical picture of how the singer would spend a million dollars to impress his girlfriend. From buying a house and furnishing it with a chesterfield or ottoman to considering a fur coat (but not a real one because “that’s cruel”), the song offers a fun, lighthearted take on dreaming big. If you haven’t heard it yet, it’s worth a listen!
Lately, this song has been playing in my head for another reason—conversations with nonprofit leaders. They often ask a million-dollar question:
What should we do with a significant investment to secure our organization’s future?
The Challenges of Nonprofit Funding
With donor bases shrinking and revenue challenges on the rise, nonprofit funding strategies are more critical than ever to ensure financial stability. Leaders must make tough decisions about how to allocate resources for long-term growth.
So, where should nonprofits start when making major financial decisions?
Where to Start
To answer this, nonprofits need to return to their roots: their mission.
- Can your mission be fully realized with this added investment? If so, problem solved.
- For most nonprofits, though, the mission is broad and requires ongoing efforts.
Achieving long-term goals means planting seeds now to grow sustainable funding for the future.
Nonprofit Funding Do’s and Don’ts
By implementing the right nonprofit funding strategies, organizations can strengthen donor engagement and secure sustainable revenue.
✔ DO: Strengthen Your Donor Base
Invest in reinstating more lapsed donors and acquiring additional new donors. This is the surest way to offset attrition and turn the tide on a shrinking donor file. Target your highest value donors and those you’re most likely to retain to build long-term growth of your fundraising revenue.
✔ DO: Invest in Planned Giving Programs
Equip your organization with the right staff and the right tools to secure and properly steward legacy donors. Personalized relationships are key to understanding what motivates donors about your mission while also ensuring that existing legacy donors remain committed to their planned giving intentions. Remember that the average bequest size is between $50,000 and $100,000 (according to FreeWill.com) and typically 200 times the size of the donor’s largest annual fund gift, so it’s worth the added effort. Putting a focus on planned giving today can future-proof your organization.
✔ DO: Enhance Donor Stewardship & Engagement
- Donor experience is one of the key factors in retention and upgrades. But let’s be clear, this does not mean sending more annual reports.
- Invest in additional staff to communicate with your mid-level and major donors. Data shows that the personal connection pays for itself almost immediately.
- Use technology–AI, digital, and on-demand printing–to scale a more personalized relationship. In one study, consumers indicated they were in favor of AI when it provided them with a better customer experience.
- This may take the form of trigger and automation marketing to meet donors where they are and recommend their next action.
- This can mean using digital printing technology to customize communications that acknowledge and recognize the donor’s relationship with the organization.
- Or it could mean scaling personalized communications to ensure the donor feels valued.
✔ DO: Invest in Research & Development (R&D)
Doing the same thing will continue to give you the same results, or worse. Advances in technology and AI mean innovation and opportunity are at an all-time high right now. Experiment with new technologies and communication channels to reach your existing and potential donors. It’s time. Nonprofit leaders are forced to make hard choices every day when it comes to balancing the budget. There is never enough money to do everything the organization wants or hopes to do. So, make smart investments that will attract, retain and cultivate donors. Plan to invest in strategies that create a better future for your mission. You will be celebrating success for years to come.
✖ What NOT to Do with Your Nonprofit Funding
✖ DON’T: Start a Program That Can’t Sustain Itself
One major challenge for a nonprofit is managing its money. They need to spend on their current mission. At the same time, they must save for future goals.
Other sources of funding, such as grants, are better designed to support new program initiatives. Invest in funding windfalls you receive in expanding fundraising programs that will multiply your impact in the future.
✖ DON’T: Put All Your Investment in One Basket
It may be tempting to go all-in on one new idea or channel that has previously been financially out of reach but be cautious. Diversify seed money to test a couple of new channels or innovations to build knowledge and gain traction in a variety of areas for smarter investment choices in the future.
✖ DON’T: Just Save It for a Rainy Day
As the saying goes, “the best time to plant a tree was 30 years ago, the second best time to plant a tree is now.” Assuming your organization is stable and has appropriate levels of reserves, aim to build for the future by investing now in ways that provide a positive return on investment and the best long-term value.
Final Thoughts: Making Strategic Nonprofit Investments
Nonprofit leaders must balance current needs with future sustainability. Smart nonprofit funding strategies can attract, retain, and cultivate donors for long-term success.
By following these best practices, your nonprofit can turn financial windfalls into lasting impact—and ensure your mission thrives for years to come.
Craig DePole is the President of Newport One. This agency has been helping nonprofit organizations for over 35 years. They are a top full-service direct response fundraising agency. Craig can be reached at freshideas@newportone.com.
