The most important job for a non-profit organization is making money. It may sound counter-intuitive, but without a steady source of funding a charity can't offer services and won't stay open for long. For the new non-profit, fundraising can be a real challenge. Most new charities fail due to a lack of understanding of charity fundraising principles.

The Grant Dilemma

A common mistake new charities make is assuming most funding comes from grants. Once they investigate this source of revenue, they discover granting organizations consider only non-profits in operation for five years or longer and showing a stable financial profile. In other words, it seems like they give money only to operations that don't need it.

This attitude makes sense if you look at it from the grantor's point of view. Grantors make investments and they want to make financial decisions that pay off, not in profits but in the amount of good done for the community. Imagine having a choice between investing your retirement savings in a startup company with no financial history or an established corporation with a long record of strong profits. Most people would take the latter, safer option.

Building a Non-Profit Fundraising Network

In the US, less than 20% of non-profit fundraising comes from grants. Most charity funding comes from private donations given by families and small businesses. While grants are an important element in a fundraising plan, they don't have the importance many people think.

Startup charities accept donations from the public to get started. They spend their first years building relationships in the community and establishing stable financing. Once they have proven their business abilities, then grants are a possible source of funding. However private donations will always be the major source of their non-profit fundraising efforts.

Non-profit organizations must constantly market their services. They want to reach not only the people they are prepared to help, but also potential donors. Charities too often don't put enough effort into marketing and suffer for it when their donations are low.

Online Fundraising Software

The internet has made it easy for non-profit funding efforts to go global, easily reaching potential donors that would have been out of reach before. For regional charities, online fundraising efforts can be targeted to websites or social networks serving the local community.

Online fundraising makes it easier for people to contribute. Once interest has been piqued by internet marketing efforts, simple and secure interfaces allow donors to make payments easily. The more transparent the donation process, the more likely an interested party will be converted to a donor.

Charities can use the software to set up online shops. People like to receive some tangible reward for their contributions. T-shirts, tote bags and other merchandise increase contributions plus act as passive advertising for the organization.

While new charities want to focus on providing help, it is important they focus on fundraising first so they can give more help in the future.