Fundraising Planning: Identify your fundraising needs

Fundraising Planning: Identify your fundraising needs

This post is part of my Fundraising Planning series, where I walk through different aspects of fundraising planning to support organizations in preparing and building capacity for successful fundraising. Check out my posts on fundraising calendars, and stay tuned for finding funding opportunities, and more!

In 2016, foundations provided nonprofit organizations with $59.28 billion, while corporations provided nonprofits with $18.55 billion [1] While this is a little over one-fourth of the $281.86 billion that individuals gave to nonprofits in 2016, foundation grants and corporate sponsorships are still an important source of income.

When approaching foundations and corporations, what do you ask them to fund? Organizations I work with often don’t know the answer to this question, especially if a foundation or corporation has multiple areas of funding interest. While there are many great fundraising opportunities for your nonprofit to pursue, you must first identify your needs before asking for funds.

Similarly, nonprofit grant and sponsorship requests should be a part of a larger, overall fundraising strategy that is directly based on your organization’s funding needs. To help with strategizing these asks, this post provides a template for documenting your needs and four steps to identifying and prioritizing your fundraising needs, which is the first task in fundraising planning.

Download the template below!

Identifying your Fundraising Needs

Step 1- Document Expenses

To identify your fundraising needs, it is important to first look at your organization’s expenses. Your organization (hopefully) will have a budget comparing actual expenses from your previous year to projected expenses for the following year. This is the perfect place to start.

Using the template or your own spreadsheet, take some time to enter what your organization is planning to spend in the categories below based on the numbers from your most recently concluded budget year. Be sure to include any changes from the previous year’s budget– new programs, increase in staff positions, etc. If your organization will be launching a capital campaign, those fundraising needs and goals may be separate from the ongoing fundraising needs and may not need to be included. Depending on your organization, you may want to include your goal amount (budgeted) and a “would be nice” amount (maximum) that includes additional funding your program could use if you are able to raise the money. You may also want to include projected expenses for the next 2-3 years if these numbers are available. Fundraising is both a short-term and long-term game, so an ability to identify ongoing funding needs can help you better plan for the future.

Expenses to document:

  • Current programs/projects- each of your current programs and projects should have a separate line item in your spreadsheet. For each program, you can include a lump sum, or break it down to include specifics such as expenses for staff, supplies, etc. As some funding opportunities could be for specific portions of your program, having a break down of expenses could help. If that information isn’t available to you, then a lump sum will work for now.

  • Planned programs- if you’re planning to start a new program in the next year, include the estimated expenses

  • Operating/administration- everything considered “overhead” is important to include in your expenses, since you can’t run your programs if you aren’t able to pay to keep the lights on. This doesn’t mean you will ask a foundation to cover your rent, but it is important to know how much you need. Again, you can include specific line item expenses (e.g. rent, administrative staff, etc.) or a lump sum.

  • Capacity building- many organizations forget to budget for items that are needed to build the capacity of the organization. Examples include additional staff, new computer systems, an evaluation plan, etc. It’s important to identify what your organization will do to build capacity each year.

  • Fundraising- fundraising often has associated expenses, such as renting a space for your next event, contracting with a grant writer, or mailing out letters for your end-of-year campaign. It’s important to include these expenses in the overall budget, whether as a separate line item or as part of your operating/ administration budget.

  • Other- if there are any other categories in your budget, be sure to include those as well

Once you’ve built this budget, total your expenses. Your revenue goal will need to be the same as or greater than this amount.

Step 2- Document Amounts Raised and Pledged

At the beginning of the year, you may already have some funds pledged or raised for one or more of your expense categories. “Pledged” funds are promised dollars that haven’t been received yet. For example, a corporate sponsor may agree to donate $50,000 to your organization over three years. The amount of money “pledged” is $50,000, but it may be $20,000 in Year 1 and then $15,000 in Year 2 and 3. You may also include recurring donations, where monthly members have committed to give $50 per month for the year, for example. Funds “raised” have already been received by your organization for the upcoming year, and are sitting in your bank account ready to be used. Depending on your existing fundraising systems, you may include money that is very likely to come in (e.g., existing monthly memberships), or money that may or may not be likely to come in (e.g., grants awarded from foundations). If all of these dollars are very likely to come in, include those in your spreadsheet as pledged revenue for the relevant line items. For example, if you were approved for a $50,000 grant for Program A, add $50,000 to Program A’s line item. If the funding goes toward general operating expenses, it can be added under operations/administration. For funds that are completely unrestricted, meaning they have not been raised for a particular program or part of the organization, add those as a separate line item called “unrestricted funds” so that you remember they can be plugged into any program or part of the organization as needed.

As “pledged” funds may or may not come in, be sure to keep them separate from the funds already raised. Once the check clears, feel free to move that amount into the “raised” category, but it’s important not to overly rely on funding that may or may not be seen by your organization. As a note, the “pledged” column is only for amounts pledged. If last Giving Tuesday you raised $5,000, don’t include $5,000 to raise this Giving Tuesday in amounts pledged. The amounts pledged are only funds that monthly members, foundations, corporate sponsors, etc. have already committed to giving.

Total your amounts raised/pledged.

Step 3- Calculate Your “Funding to Raise”

By subtracting the amount raised from your expenses, you will have the amount of funding you still need to raise for the year. The template provided has formulas to automatically total for you, but please double check that they're still correct if you added or deleted rows! 

If you haven't downloaded the template yet, you can download now!

In addition to a total amount to raise for the organization, it is helpful to total the amount of funding you need to raise for each line item. Therefore, you’ll know when and how much additional funding you’ll need for Program A or Program B, which brings us to prioritizing.

Step 4- Prioritize your Funding Needs

Some things are easier to fundraise for than others. For example, many corporations or foundations are not likely to provide unrestricted support that could go toward paying your organization’s rent or updating office furniture. However, for nonprofits that rely on an office space to conduct their work, rent is critical but new office furniture could be delayed a year. Therefore, some areas of your budget could be cut back on if absolutely necessary, but others could not. (Note: if none of your budget areas could be cut back on if necessary, your budget may be too low!).

Now that you have an understanding for how much you need to raise for your expense categories, decide which ones you will prioritize for making funding requests. General operating requests or unrestricted donations are great, because that funding can go wherever it’s needed. However, it’s likely that you will need to make specific project or program requests when approaching foundations, corporations or even individuals that are based on their areas of funding interest. Answer the following questions to help you prioritize your funding needs:

  • Which of these areas has the biggest funding gaps?

  • Which areas may be most compelling to funders?

  • Are there any areas for which insufficient funding was raised in the last three years?

  • If your organization raised insufficient funding this year, in which area or line item would your organization be affected the most? The least?

  • By when do you need funding for each area?

Note: if all of your programs have sufficient funding, but you are struggling to cover your general operating expenses, prioritize that! There are fundraising strategies that can help cover such costs (stay tuned!). However, if all of your program funding comes out of your general operating funds, then it may be good to get supplemental support for programs or projects so that you can continue to have sufficient operating funds.

Begin your fundraising planning!

Now that you have identified your fundraising needs, you are ready to begin setting your fundraising goals for the year and developing your fundraising calendar. Stay tuned for more information on finding funding opportunities and other fundraising planning topics!

I’m Amanda Wallander Roberts, MSSW, a consultant passionate about building fundraising and evaluation capacity with social organizations. I’ve helped over 60 social organizations fundraise and evaluate programs, including raising over $22million, and developing more than 50 logic models, evaluation plans, and process maps. Learn more about my services or contact me for support today!

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