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  • Writer's pictureJay Frost

5 Ways to Gain Independence from Government Funding

Imagine if there was a switch that turned on and off the nonprofit sector just as Congress shutdown the US government in September 2013.

Many hospitals would shut down. Most universities and colleges would close. Social services would shutter. Performance spaces would remain dark.

Thankfully, that doesn’t happen. As long as nonprofit organizations have resources independent of the government they can continue to provide services.

And it’s a good thing too!

The impact of charitable organizations is massive and pervasive, from disaster relief and blood banks to volunteer fire departments and concerts on the village green. The sector generates a sizable chunk of the US economy and employs an enormous percentage of the population. That is true in more and more of the world as well.

Beyond the money and the activity is the central role these organizations play in organizing ourselves around ideas to make a better world.  As Toqueville observed long ago, “In the United States, as soon as several inhabitants have taken an opinion on an idea they wish to promote in society, they seek each other out and unite together once they have made contact.  From that moment, they are no longer isolated but have become a power seen from afar whose activities serve as an example and whose words are heeded.”

For some nonprofits today, however, that independence is more fragile. The connection between government and charitable activity is often so great that a shutdown threatens their very existence.

Take the Combined Federal Campaign, the federal government’s workplace giving campaign. The CFC raised hit its high watermark in 2009, reaching $282.6 million. Since then it has dropped annually, with a particularly steep decline in the wake of the last government shutdown. In 2013, the campaign generated just $209 million. New guidelines and a shortened fundraising window for this fall suggest declines are likely to continue.

Nor is this is limited to government workplace giving.  A full 57% of respondents to a recent Nonprofit Finance Fund poll reported that they receive government funds.  Of those who received federal government payments, 5.7% closed programs and 15.2% scaled back programs in the wake of the government shutdown.

That may not sound high. And it may be temporary. But just imagine that nearly 21% of something your organization did needed to shut down or scale back?  What would that impact be like on you, your colleagues, and all those you serve in the community?

The present is always the best time for nonprofits to shore up their own defenses and become more self-sufficient.

Here are five things your organization can do to gain greater financial independence through private philanthropy throughout the year:

1.  Call Your Supporters:  When was the last time you personally thanked your donors? Pick up the phone and tell them how their support made a critical difference this year. Doing so is key to retaining their support. Set a goal of calling and personally thanking every single individual donor who gives $100+ this year.  

2.  Postscript Your Letters: Here’s something I learned from working with two Ambassadors early in my career…you should personally sign and postscript your thank-you letters. For an added touch, cross out the “Mr. and Mrs.” and handwrite your donors’ first names (if you are sure you know them).  Letters are even more rare than calls these days and handwritten or post-scripted letters set you apart. Set a goal of making every acknowledgement personal.  It helps generate repeated giving.

3.  Help Your Donors to Give Smart: You can bank on this: No matter how smart or successful your donors, they do not necessarily know the best ways to give. You need to communicate often about the benefits of giving gifts of appreciated stock. The market is at an all-time high. It makes little sense to sell stock and give cash.  Tell them. Over and over. On Facebook and your website, at special events and in mailers.  Make your goal this year to double the number of gifts of stock.  

4.  Grow Your Constituency: A successful fundraising effort is dependent on two things–retaining your historical donors and attracting new ones. In every channel you inhabit, drive traffic to pages where you can capture new names, addresses, phone numbers and email addresses. This is where all constituency building starts.  You also will want to retain information on where your new friends come from.  Set a goal to attract new friends, not just “likes.” 

5.  Making Major Giving the Goal: Only about 1%-3% of your constituency has the financial capability to finance 80%-95% of your capital objectives.  We love all our supporters equally but those with major gift capacity require more focused time and attention.  Make your goal to identify 50 new major gift prospects each month to keep your fundraising focused on the biggest opportunities in the year ahead.

If you take these steps, donors will see that they are your closest partners in making the mission of your organization a reality.  And you will have far less to worry about if Congress loses its collective mind again in the future!

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