Nonprofits are always seeking funds. Entire departments are established for fundraising. Yet some funding opportunities aren’t a good idea. Learning which ones to turn down and which ones to accept can save your organization a lot of time and debate later on.
Why Say No to Funding Opportunities?
Why turn away money? After all, aren’t all opportunities for funding good opportunities?
Alas, no. Here are some reasons why you may wish to turn down a funding opportunity:
- It’s a significant amount – but unlikely to be continued another year: Although a large amount of money may be useful to fund a major project, the lack of it the following year may cause a great deal of stress for your organization. It may be better to scale slowly than to use a windfall for a major advance, just to have it stall for a while.
- It is government-funded, but it is an election year: While that may not necessarily indicate change, if the incumbent loses the election and the funds are part of a controversial project, the funds may evaporate. The sudden loss of funding may negatively impact your nonprofit.
- Funds are restricted: Restricted funds have their place in any nonprofit, but if all sources are restricted funds, this can hamper the organization’s ability to achieve its mission. Without funding for overhead, marketing, and similar needs, programs do not have adequate support. All the funding in the world for a program won’t make a big difference if you can’t support it long-term.
- The funding source goes against your mission: You may not have pursued the opportunity, but it arrived on your doorstep. Alas, it contradicts vital aspects of your organizational culture or mission. That’s a good reason to say “no” to an opportunity, tempting though it may be. You must remain true to your mission for long-term stability and growth or risk alienating donors who also believe in your mission.
Saying no can be difficult. It’s hard to turn down opportunities, especially if you’ve been working hard to find new ones. Rather than worrying about turning down opportunities, focus instead on the better step ahead: preparing guidelines for funding sources so that your staff knows where to look, what to look for, and how to develop the right sources of funding.
Now Say Yes – Prepare Funding Guidelines
To prepare funding guidelines, you’ll need to work out which opportunities align with your mission. Then, examine how the opportunity impacts the bottom line, both short and long term.
- Speak with your accounting team and finance professionals to discuss what, if any, impact specific types of funding make on the long-term finances of the organization.
- Decide what portion of restricted funds should be pursued, and for which types of programs. Include this in the guidelines.
- Examine how government-funded opportunities may or may not align with your organization’s mission. Then, develop written guidelines about the types of opportunities that are acceptable and those that are not.
- Develop a plan for “gray area” funding opportunities. How should these be evaluated and by whom? Do you want to pursue them and then decide later on what to do if they should come through; or discuss as a team which ones to approach and which to decline?
- Share guidelines throughout your organization. Review annually to ensure they continue to align with the values your organization holds dear and with the current plans, financial forecasts, and information at hand.
Passing up an opportunity may feel frightening, especially if your organization is desperately in need of funds, and whose isn’t? By focusing on the “yes, let’s do this” and preparing funding guidelines, you can decrease the times you must decline funds and instead, spend energy wisely on pursuing valuable funding opportunities.
Welter Consulting bridges people and technology together for effective solutions for nonprofit organizations. We offer software and services that can help you with your accounting needs. Please contact Welter Consulting at 206-605-3113 for more information.