Since returning to Austin in 2013, I have enjoyed learning about the city’s “startup scene.” Austin has become one of the nation’s leading “tech” cities. Nav Athwal noted in Forbes, “5 Cities Poised To Be The Next Silicon Valley Tech Hub,” and he placed Austin at the top of the list.
Drew Hendricks wrote an insightful article for Forbes that I enjoyed, “7 Steps to Getting Funding For Your Startup.” These same steps ring true for nonprofit organizations engaged in raising major gifts, in my more than twenty years of experience. Drew suggests:
- Have a plan of attack
- Do your homework
- Start searching for money
- Be prepared
- Have the ultimate pitch deck
- Be persistent.
Have a Plan of Attack
Drew points to the need for startups to have a business plan, and I would argue this is also true for nonprofit organizations. Nonprofits need to have a clear vision regarding what they hope to accomplish, and that vision should inspire confidence and be genuinely convincing to potential donor “investors.” The project for which funding is being sought should be a meaningful part of an organization’s strategic plan, and the project should relate directly to the nonprofit’s mission, and the fulfillment of that mission.
Do Your Homework
Determining how much money your startup – or nonprofit – will need in order to accomplish the goal at hand is key. It is not terribly inspiring to donors and investors to help you reach a fundraising goal, then to find your organization still lacks the funding required to complete the project. Trust me, I’ve seen that happen on several occasions, and I’ve had to work hard to raise those funds.
For instance, nonprofits should consider including contingency funding in campaign budgets. I have worked on a few capital campaigns where construction materials like concrete and iron suddenly spiked in price due to increased demand statewide, nationally and/or internationally. Review your budget and add contingency funds for those “just in case” moments. Do not put yourself in the position of having to return to your donors or investors with your hand out again.
Start Searching for Money
Drew’s article points to venture capitalists, angel investors, commercial lenders and government agencies, and he notes how startups should conduct research to find appropriate investment candidates.
Smart nonprofit organizations conduct the same kind of in-depth research prior to launching a campaign – a process that if done well takes time – looking first internally to likely existing individual, family, foundation, corporate and government donors, then spreading out to potential external sources of funding.
Nonprofits will want to focus on potential donors who are more capable of making significant contributions. Those prospects should be approached first in order to attain the financial goal more quickly. But also, do not forget those supporters who might not be capable of making significant donations, yet they may have connections to others who are capable. Be sure to identify “influencers.”
In my experience, the more thoughtful advance research a nonprofit conducts, the better (and more professionally) a campaign will run.
Drew suggests startups network online to start, investigate seed accelerators, meet those interested in their line of business and the like.
Today, nonprofits also need to network online. Taking a step back for some of my nonprofit colleagues, they also need to have a polished online presence (website, Facebook profile, Twitter account, LinkedIn account and the like).
Donors and “investors” are active on many platforms, and they are learning daily about your work and accomplishments there. Nonprofits need to be online also. Some of you are still holding back, but don’t.
Through whatever means you choose to communicate, ongoing communication is key. It is the constant drum beat behind any successful campaign. I have seen nonprofits fail simply because they failed to communicate!
During the 3 Day Startup (3DS) retreat at Capital Factory noted above, several angel investors noted the critical need for communication with all investors before, during and after funding is secured. The same is true for nonprofits!
Drew notes, “Prior to asking for funding, you’re going to have to argue your case in probably a number of meetings. Don’t get flustered and blow this golden opportunity.” He notes these insightful tips, and I cannot improve upon them.
- Describe your goals in a clear, concise and efficient manner.
- Know the people that you’re sitting across from.
- Have questions prepared.
- Practice as much as possible.
- Make a great first impression – for example dress to impress.
Have the Ultimate Pitch Deck
Some excellent points are listed in Drew’s article regarding developing an effective case for financial support. Your case should include:
- Market Opportunity
- The Problem
- Revenue Model
- Marketing/Growth Strategy
- Management Team
- Asking for Investment
What’s not to like here! The logic is much the same for a nonprofit major gift or other fundraising campaign.
While nonprofit organizations do not want to annoy donors and potential donors, I have personally seen a “no” response to a request for a major gift turned into a “yes” over time.
“Of course you don’t want to nag your potential investors. But you absolutely need to follow-up. Checking in every now and then until you get an answer shows that you’re serious about your startup. And, even if you’re denied, you can ask why you weren’t funded. Remember, learning from our mistakes is one of the best ways to find eventual success.”
Carolyn’s Nonprofit Blog contains many helpful articles and posts about how to organize nonprofit major gift campaigns, and cost-effective ways to “do it yourself.” Certainly, startup business ventures are not the same as nonprofit campaigns, but the similarities are striking. Nonprofit fundraising executives might enjoy taking time to attend startup programs online and/or in-person. These can be eye-opening events, especially when they include actual investors who can share what they like or dislike. They can provide great insight.