Besides spending 2 years as Program Officer at the Bill & Melinda Gates Foundation, Thomas Park also has over a decade of experience on the ground working on nonprofits and international development initiatives. This includes piecing together a data project that Melinda Gates quoted during her TED Talk on contraception.
He now spends most of his time as VP of Corporate Strategy & Initiatives at BDC Capital. What follows is his step-by-step advice when putting together a fundraising strategy for your nonprofit.
Step 0: Understand the people with the money and their goals
Before ever stepping through the door to a fundraising meeting, you have some homework to do: understand what they want, and how they operate. There are different buckets of money: government grants, philanthropy, and corporate sponsorships.
“Understanding the dynamics in each one is important”, says Park. “They each have clear sets of criteria so understanding what they’re looking for and having someone that knows how to navigate that red tape is crucial.”
“The Gates Foundation, for example, is focused on larger investments that can really move the needle. So that if they give you funding, within 18 months you need to be impacting millions of people.”
Understanding each philanthropy’s business model is important because they each have program officers that have a very clear criteria about what’s a yes and what’s a no.”
For corporate sponsors, your project has to line up with what the corporations are looking to achieve – and that’s changing too.
“Before, it used to be just about writing nonprofits a check and all you had to do was put their logo up. But now they’re asking about impact, and a lot of other things. Which means they operate similarly to many US philanthropies.”
The importance of bootstrapping early on to gain traction
Once you understand the other party’s motivations and business model, the next step is to build a track record. No government, philanthropy, or corporation wants to throw money away. They want to know that they’re investing it into a competent team that has reliably shown that they can make an impact. To build that track record and raise money, you might need some money.
This might seem like a catch-22: how can you get the resources needed to make an impact in the first place if people only fund projects that are already making an impact? The answer is to bootstrap at first, says Park: “Make your own money – sell swag or services before you go approach others because people want to fund successful projects. Develop a sustainable business model, and then the money becomes easier to generate.”
A better way to frame “selling out”
But after getting a taste of a bootstrapped social enterprise, many entrepreneurs worry that getting sponsorship means they’re “selling out.” This type of thinking can prevent you from scaling your impact.
First of all, nonprofits aren’t saints. Park points out.
As somebody that has worked in nonprofits for more than 10 years, I can say that nonprofits can be some of the most cut throat environments out there, even more so than corporations.”
One reason for this is the incentive structure at many nonprofits: top performers often don’t or can’t get rewarded properly for their impact. The downstream effect of this is that sometimes nonprofits attracts the wrong kinds of people – people who are focused on a zero-sum game of status. In other words, they’re competing over slices of the pie instead of working together to make the pie bigger.
Second, big businesses sometimes get an unnecessarily bad reputation. And sometimes, rightfully so – some large corporations have proven to do questionable things with your data, for example. But you should channel your anxiety about partnering with the wrong business into doing your homework to figure out which corporations are a good fit for you. Find the handful of companies that are genuinely excited by the prospect of having an impact in the domain that your project operates in, and disregard the rest.
Money mobility & universities
Even after deciding to raise more money, it’s not easy to have people write a check to you – there’s a lot of financial and legal friction that governments, philanthropies, and corporations face when making donations. One way around this: attach yourself to a university, advises Park. “You either need to have a great network so you can mobilize the money that way, but it’s really universities as research centres that have full fundraising machines and techniques.”
“In Canada, I would figure out a way to link up your nonprofit with a university because we don’t have a robust NGO network with deep fundraising capabilities or sources of funding”, he says. “A lot of it is done at the university level. I’ve seen this in global health initiatives as well. Because at the very least people can tie their nonprofit projects up to a research project. Those tend to be the most successful.”
“So if I was a government, it’s easy to write a check to McGill University, but it’s hard for me to write a check to NGO Jane Doe or John Doe, because that involves a lot more due diligence and procurement. I don’t have to go through that same paperwork for McGill. There’s all this ‘plumbing’ you gotta go through if you’re not linked up to a university – a lot of checks and balances that are tricky.”
By attaching yourself to a university, you’re able to leverage their secret weapon: university advancement offices.”
“If you came up with an app that solved hunger in high-density cities like Lagos for example, then you need to start applying for grants”, he says. “And at a certain stage of growth, you need professional grant writers that are very good at navigating the red tape and showing that you fit the criteria that governments and companies are looking for. You can get around all that through a university because university advancement offices have people like that in place already.”
One example of a university-attached initiative is McGill’s Policy and Data Science Summer program (PODS), which Park co-founded with Professor Derek Ruths and Professor Nicholas King. BDC Capital is the lead sponsor on the program.
“It lined up with BDC’s goals of building strong Canadian businesses as well as having a significant impact on society at large”, Park points out. “We’re in a similar age now with data and AI, as we were in the 90s with internet. It’s in a nascent stage.”
The 2 biggest mistakes nonprofits make when fundraising
So you’ve done your homework on the donor, you’ve bootstrapped your way to some traction, you’ve convinced yourself that outside funding is a useful tool, and you’ve attached yourself to an organization that makes it easy for donors to write you a cheque. You still have to walk through the door into the meeting, and take a long-term view of your relationship with your donors.
The biggest mistake founders make in meetings: “Not listening”, says Park.
Some founders don’t listen – I have been in meetings with some of these people where they’re trying to force their idea on you. They’re not open to feedback and improving, they just shut you out and try to defend themselves.”
Coachability is an important character attribute in founders when donors make funding decisions about a company. If they think that their feedback will go unnoticed, it becomes a riskier decision. It’s also a sign that you won’t be able to learn quickly and adapt.
Instead, adopt a collaborative mindset when walking into these meetings. Your stakeholders want to help you, and they have experience that you can learn from. Instead of spending your energy defending your ideas to the death, take notes on their feedback and consider integrating some of them – even if it’s just to show that you value their opinion.
The other mistake that founders make is a longer term one – they frame their exchange with the sponsor as a transaction rather than a relationship. “It’s the ‘gimme gimme gimme mentality’”, points out Park.
It’s obvious they’re just after the money. I’ve had people sign the deal, and then not talk to us for a year, until it was time to renew again. Then all of a sudden they want to get coffee.”
Instead, update your stakeholders regularly with your progress. To make this easier, find or build an email template that you can re-use, and schedule time to write it on the same day every month. And don’t forget to give your stakeholders “homework”, whether that’s an introduction, or advice on a problem that’s come up. You’re on the same team and they want to help you: by sponsoring you, they now have skin in the game – if you succeed, they succeed.
Understand the different buckets of money, the motives of those organizations, and see how you can align yourself with their mission.
Bootstrap your way to early traction – people want to fund successful projects that have proven they can make an impact.
Raising external funding is a powerful way of scaling your impact.
Attaching yourself to a university reduces the friction for organizations that want to give you money.
Adopt a collaborative attitude in meetings with stakeholders, and update them regularly with your progress – you’re on the same team so treat it like a relationship.