To assist nonprofit boards and management staff in this area, we’ve created the following summary of general best practices that can be used as a guide.
Keeping all your eggs in one basket.
Leaning too heavily on one or a small few sources of income can put a nonprofit organization into a precarious position.
Ideally, nonprofits should seek to diversify their “portfolio” of revenue streams to include a mix of the following:
Individual / board / major gifts
Foundation / corporate / gov't grants
Bequests, estates, planned giving
Special fundraising events
Program fees / Fees for goods, services
Additionally, if a large portion of the organization’s revenue comes from a single source, the organization should strive to operate as though those funds do not exist in order to reduce its dependence on that source.
One event is to celebrate the mission with the community.
The other event is typically aimed at large names and large dollars.
Role of the Board of Directors.
This is accomplished by:
- Leveraging their personal and professional networks to find and facilitate opportunities, influencing potentially large donors, and guiding fundraising activities.
- Giving an annual gift. Foundations, corporations, and large donors typically prefer to see 100 percent participation from Board members on this point as a measure of commitment and engagement.
- Many nonprofit organizations implement a “give/get” policy in which Board members are required to give or successfully solicit a minimum amount each year. In these cases, members of the Board should determine an annual amount that is appropriate, and prospective Board members should be made aware of the expectation before coming on board. Additionally, it should be a goal of the Board that this annual amount increases every two years, whenever possible.
In either case, Board members are expected to hold each other accountable to the policy.
- Enhancing public relations and garnering support from the community.
- Periodically reviewing their performance as a Board in the areas listed above at least every 3-5 years.
Other external engagement.
This type of strategy and action will bring a continual and growing flow of support into the organization.