What are some of the key factors to consider when choosing a funding model for your non-profit?

1 Your mission and vision

Your funding model should align with your mission and vision, and support your core activities and values. For example, if your non-profit aims to empower marginalized communities, you might want to avoid funding models that rely on donors or partners who have conflicting interests or agendas. Similarly, if your non-profit seeks to create systemic change, you might want to consider funding models that allow you to invest in long-term solutions and advocacy, rather than short-term projects and services.

2 Your target beneficiaries and stakeholders

Your funding model should also reflect the needs and preferences of your target beneficiaries and stakeholders, such as the people you serve, your staff, your board, your volunteers, and your supporters. For example, if your non-profit works with vulnerable populations, you might want to choose a funding model that ensures their participation and feedback, and protects their dignity and rights. Alternatively, if your non-profit engages with multiple sectors and actors, you might want to choose a funding model that fosters collaboration and innovation, and leverages diverse resources and expertise.

3 Your market and competitive advantage

Your funding model should also take into account the market and competitive advantage of your non-profit, such as the demand and supply of your services or products, the availability and accessibility of alternative or complementary solutions, and the unique value proposition and differentiation of your non-profit. For example, if your non-profit offers a service or product that is in high demand and low supply, you might want to choose a funding model that captures some of the value you create, such as earned income or fee-for-service. Conversely, if your non-profit addresses a problem that is neglected or overlooked, you might want to choose a funding model that attracts attention and support, such as crowdfunding or cause marketing.

4 Your financial goals and capabilities

Your funding model should also match your financial goals and capabilities, such as the amount and type of funding you need, the level and source of risk you can tolerate, the degree and frequency of reporting and accountability you can manage, and the skills and systems you have or need to develop. For example, if your non-profit needs a large and stable amount of funding, you might want to choose a funding model that relies on a few major donors or grants, rather than many small donations or events. However, if your non-profit can handle more uncertainty and complexity, you might want to choose a funding model that diversifies your income streams and reduces your dependency on any single source.

5 Your organizational culture and values

Your funding model should also fit your organizational culture and values, such as the way you work, communicate, learn, and grow as a non-profit. For example, if your non-profit has a culture of innovation and experimentation, you might want to choose a funding model that allows you to test new ideas and adapt to changing circumstances, such as venture philanthropy or social impact bonds. On the other hand, if your non-profit has a culture of excellence and quality, you might want to choose a funding model that enables you to deliver high standards and results, such as performance-based contracts or outcome-based payments.

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?