Those pursuing a Master of Public Administration in Non-Profit Management are generally less interested in creating company profit than they are in the good work their organization does. Yet, just like for-profit companies, non-profits have a bottom line to meet. Building and sustaining short- and long-term capital from various sources is absolutely crucial to a non-profit’s sustainability, growth and continued success.
Designing and executing a fundraising plan to ensure a non-profit’s financial health is the role of that organization’s development department. This department may consist of one person taking on those responsibilities in a small organization. Or, in a large-scale non-profit, it may be a team of staff and volunteers, with sub-departments dedicated to every aspect of that organization’s financial development and sustainability.
How Does Non-Profit Development Differ From For-Profit Development?
There are many answers to this question, but an important distinction is in the time-sensitivity of non-profit versus for-profit financial management. Although for-profit companies must meet and exceed their bottom line to stay afloat and generate profits, it is in a company’s investors’ best interests to keep their investment alive and profitable. In some situations this can provide for-profit companies a sort of safety net they can use to cope with market swings and difficult periods.
Building such a safety net of funds can be difficult for non-profits, given that their budgets and funding sources are generally not self-perpetuating. An important part of non-profit development is securing funding through grants, corporate sponsorships and special events. Yet, although it would be ideal, these funds are not always secured, applied for or given year after year. Grants and sponsorship funds are also often restricted to specific uses, limiting the ways non-profits can apply those funds. And overall, the vast majority of non-profit funding comes from direct contributions.
The non-profit’s “investors” are donors, contributing to support an organization’s cause and mission, rather than the for-profit investor’s long-term investment return and capital gain. Whether they are major donors or individuals contributing relatively nominal amounts, all aspects of building a community that supports a non-profit’s financial well-being involve careful planning combined with developing strong relationships and networks.
What Are the Differences in Short- and Long-Term Development?
Although not your traditional profit-sharing investor, donors need to feel invested in an organization’s success, in both the short and long term. Being able to plan for present and future budgeting and growth means that the development department needs to focus on fundraising campaigns and sources that generate funds for specific programs or projects, annual operational costs, and projected budgets for years to come.
Keeping a non-profit in the black requires a multi-faceted approach to development planning. Within each method of fundraising, development staff need to design every aspect of the campaign carefully:
- Initial research into populations served and the target “market” for donation solicitation.
- Budgetary needs and funding goals.
- The campaign timeline.
- Marketing strategies.
- Campaign data analysis.
- Donor acknowledgement.
- Retention strategies.
The following are three examples of fundraising methods commonly used in non-profit development.
A capital campaign is usually used to meet a specific, short-term financial need, such as a youth group raising money to purchase a building for a teen community center. Even a grant, though helpful, will often require organizations to “match” the granted money with public donations. Special events can also be an important part of these campaigns, but oftentimes more for building exposure and community networks than for the actual funds generated. The bulk of capital development comes from the donor contributions over the course of a campaign.
Annual Giving Campaigns
Annual giving campaigns also rely heavily on donors and strong relationships with the largest contributors. But an annual campaign is usually used to generate funds for an organization’s general operational costs such as staffing, rent, utilities and regular programming. Setting and achieving regular annual giving goals can help an organization maintain stable budgets year to year. And, being unrestricted, organizations have freedom to use these funds in whatever way necessary.
Planned giving can greatly aid a non-profit in future budgeting, development and growth. Often, these gifts come from donors committing to donate a portion of their estate to an organization at a certain date, spread over a period of time, or at the time of their death. A person may also set up a charitable remainder trust, wherby a non-profit organization receives a portion of the annual profit from that trust.
Clearly, non-profit development is a complex aspect of non-profit management, yet it is absolutely essential to an organization’s sustainability and growth. A strong working knowledge of non-profit development can greatly help aspiring public administrators make a difference in their future organizations and communities.
Learn more about A-State’s online MPA in Non-Profit Management program.